As reported by the U.S. Department of Labor in April 2010, internships in the for-profit private sector are most times viewed as employment and, therefore, compensation must be given unless they meet all criteria of a test relating to trainees. The applicable test for determining if an intern is receiving training for their own educational benefit must meet the following six criteria:
1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
If all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the Act’s minimum wage and overtime provisions do not apply to the intern.
Many for-profit companies in the private sector have navigated around the need to compensate certain interns because colleges and institutions give student interns school credit in exchange for the hours worked at these companies. Despite this trend that lasted for years, some institutions, such as Columbia University, are now no longer offering its undergraduates registration credits in exchange for internship experience. “There is no doubt that internships can be valuable experiences for students seeking an introduction to a range of careers and professional cultures,” Dean of Academic Kathryn Yatrakis wrote in a campus email obtained by Newsweek. “However, we expect companies to appropriately compensate students for work performed during internships.”