Hiring Interns in Hawaii

Paid Internships:

Paid interns are considered and should be treated as employees under the Fair Labor Standards Act (FLSA), Hawaii wage and hour laws, and most other labor and employment laws.

Paid interns must be:

• paid at least minimum wage and overtime, unless exempt
• provided health insurance coverage pursuant to Hawaii’s Prepaid Healthcare Act
• provided with unemployment insurance, temporary disability insurance, and workers’ compensation
• protected by harassment, discrimination, safety, and other labor and employment law

Unpaid Internships:

Quick Reference Employer Checklist:

General Guidelines:

Generally, under FLSA, for-profit private sector employers must pay workers, however, federal courts and the U.S. Department of Labor (DOL) allow private sector employers to have unpaid interns that are not classified as employees if the intern is the primary beneficiary of the internship. To assess whether the intern is the primary beneficiary of the internship, please see the “Primary Beneficiary Test” section below.

In the non-profit and government sector, it is generally easier to utilize unpaid interns, as those interns may also be considered “volunteers” to do unpaid work. Please note that for-profit private employers are prohibited from having volunteers and volunteers in the non-profit and government sector have certain requirements that must be adhered to.

Properly classified unpaid interns are not entitled to most employment protections, including wage and hour rules such as minimum wage and overtime pay, healthcare coverage, unemployment insurance, and temporary disability insurance. Employers should check with their workers’ compensation and general liability insurance carriers to confirm coverage of unpaid interns.

The “Primary Beneficiary Test”

Under the “Primary Beneficiary Test,” employers must consider the “economic reality” of the relationship to determine which party is the “primary beneficiary” of the intern relationship based on following factors:

1. No expectation of compensation: Any promise of compensation (express or implied) suggests that the intern is an employee.
2. Educational benefit: Extent of similarity between internship training and what is provided in an educational environment, including clinical and hands-on training.
3. Academic program: Extent of internship integration with an education program, such as integrated coursework or receipt of academic credit.
4. Accommodation: Extent of accommodation of the intern’s academic commitments and calendar.
5. Limited duration: Duration is limited to a period of beneficial learning.
6. Displacement of work: Extent the intern’s work complements and does not displace work of paid employees, and educational benefits received by the intern.
7. Future entitlement: Understanding that there is no entitlement to a job offer after the internship ends.

All factors must be considered based on the totality of circumstances. If an analysis determines that the intern is the primary beneficiary of the relationship, the intern can be properly classified as a non-employee, unpaid intern. If not, the intern should be paid and classified as an employee.

Please refer to DOL Fact Sheet #71: Internship Programs under FLSA for more information.

Best Practices for Internship Programs

• Have a written internship agreement that specifies:
  • Compensation (or lack thereof)
  • Learning objectives, structured learning experiences, and mentorship program
  • Start/end dates that limit the duration of internship
  • Evaluation criteria and limited scope of internship
  • Partnership with school for academic credit
• If hiring minors (under 18 years of age), review minor labor and employment laws.
• Provide the intern with an onboarding plan that includes important policies (harassment, discrimination, workplace safety, complaint reporting, timekeeping, etc.) and training.
• Assign a mentor or supervisor that regularly communicates with the intern.
• Document intern status, program details, and communications.

Members may contact their HR Consultant with questions regarding internships.

Please note the information provided is for informational purposes only and may not reflect the most current regulatory developments. We strive to keep our materials up to date, but there may be occasions when information becomes outdated. Users are encouraged to verify the applicability of the content before relying on it for decision-making. If you have any questions or concerns regarding the accuracy or relevance of the information, please contact us directly for assistance.