Employers Need to Understand What Constitutes an Employee Versus an Intern

Providing internships is now commonplace in a variety of businesses. Some internships are for school credit and others for pay. Summer, which is not that far away, is a popular time to bring on the much needed spare hands to help out around the office or work site.

An "employee" includes all natural persons who perform services for another for valuable consideration (Section 104, 77 P.S. 22). Paid interns are covered under the Pennsylvania Workers' Compensation Act (WCA) and will be entitled to compensation in the event they sustain injuries in the course and scope of employment. However, the web becomes tangled when dealing with those interns who are not paid. Valuable consideration is not necessarily monetary in nature. An unpaid intern typically accepts a position for his or her educational benefit to gain experience and enhance their skills and sometimes for school credit. Interns seeks to gain something out of the experience and to expand their knowledge.

The key to determining whether an unpaid intern is entitled to compensation is the type of work performed. Unpaid interns are likely entitled to workers' compensation in Pennsylvania if they perform work equivalent to paid employees. An analysis will have to be made based on the facts and circumstances on a case-by-case basis to determine whether compensation is due and owed under the WCA. A good starting point is the six part test outlined by the U.S. Department of Labor (http://www.dol.gov/whd/regs/compliance/whdfs71.htm). The Department outlines a test for employers to meet to determine whether there is an employment relationship. Below are the criteria listed:

The following six criteria must be applied when making this determination:

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 the six elements are not met, then an employment relationship exists and the worker must be compensated, at least, minimum wage. If required to pay a worker, the valuable consideration requirement is most certainly achieved, entitling that worker to compensation under the WCA.

There is a distinction between an individual working under some kind of contractual duty and an individual who is acting as a volunteer. If someone is hired simply to fill his or her free time, they are likely not considered an employee for compensation purposes and potentially would not be covered by the WCA.

It is certainly beneficial to have extra help around the office and to give students and others the opportunity to learn about a business, but employers need to be conscientious and diligent in determining whether an intern qualifies as an employee under the WCA to avoid potential exposure and litigation.

For more information contact Ashley Schilgen Johnson at aschilgen@wglaw.com or 267.765.4134