Many nonprofit organizations are confused whether to offer internships in the wake of recent reports regarding illegal/unpaid internships. Many nonprofits lack sufficient funds to pay regular employee wages or even a legal stipend to the interns.
The Fair labor Standards Act stipulates a six-point test to determine whether an intern can be exempted from the minimum wage requirement. According to the statutory mandate, all the six conditions have to be religiously followed by every organization; however, nonprofits find it extremely difficult to follow the FLSA stipulations since they derive some obvious advantages by engaging the service of volunteers or interns.
The Department of labor Wage and Hour Division (DOL) has recognized volunteer programs. A person may volunteer time to religious, humanitarian, civic or similar nonprofit organizations as a public service or charity, without any compensation. Such activities will not qualify for FLSA minimum wages requirements. Such ordinary volunteerism is recognized by DOL if it is for a nonprofit, no compensation or expectation of compensation is made, and the activity is less than a full-time job. The DOL also looks at whether the regular employees of the nonprofit are displaced as a result of such volunteerism. It is to be noted that some nonprofits are of a commercial nature, offering public services like trucking, operating department stores or restaurants. In such cases, the volunteers are performing services of a different nature and hence are not considered as volunteers. Such persons are entitled to compensation under FLSA minimum wage requirements. Hence it is always appropriate for nonprofits to have the volunteers sign agreements that there is no expectation of compensation and the services are absolutely voluntary in nature.
Sources:
http://nonprofitbanker.wordpress.com/2010/08/02/the-weekly-balance-sheet-august-2/
http://laborlaw.typepad.com/labor_and_employment_law_/2007/11/unpaid-internsh.html
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