More Than Free Labor: 5 Things to Know About Hiring Interns


Hiring interns can be great for a small business; they are cheap, ambitious and filled with youthful energy. They also can be a labor law nightmare!

Five things to know about hiring interns–paid or unpaid.

Hiring Interns
Photo: Sean MacEntee

Hiring interns can be a significant labor resource for small business; they are cheap, motivated and can bring a fresh, youthful perspective to a company.

What is the best thing about hiring interns?  Some of them even work free! Unpaid interns can be a place where some employment problems arise.

Employers have to be extremely careful with hiring unpaid interns. This has been an increasing amount of attention to unpaid interns since the U.S. Department of Labor and some states are beginning to crack down on hiring and pay abuses.

States like Oregon, California, and New York are beginning to cast a more critical eye on unpaid interns, following up with aggressive enforcement.

What is the best way to make sure your internship program (paid or unpaid) conforms to labor laws? Five things you need to know:

Know the six legal hiring criteria set by the Department of Labor.

Many employers do not realize that there are six criteria under the Fair Labor Standards Act for interns to be “trainees” and not actual employees.

For an example:

  • Training should directly benefit the intern (even to the company’s fault)
  • Interns must not replace actual employees
  • Employers should see no immediate benefit from the intern’s work. The goal is to provide relevant practical experience. Keep non-learning tasks at a minimum. Tasks that are a “grey area” the employer must provide the context for the importance of what they are doing how it will benefit in the end.

Decide if the internship is paid or unpaid.

After learning the criteria of internship, review the internship and evaluate the legalities. Even if you conclude that the internship should remain unpaid, the adage will apply: “You get what you pay for.”

Often, the best candidates are the same enterprising people who start early and get paid positions. Unpaid internships also weeds out students who cannot afford to work without pay. A socio-economic conflict could also call the ethics of your business practices into question.

Consider pros and cons of hiring unpaid interns.

Obviously, unpaid internships appeals to startups and smaller, growing companies. The lure of cheap labor could expose these companies to conflicts with the law. On the other hand, fairly compensating interns could be a good for your company.

Paying students will motivate them to do good work. Often, employers marginalize unpaid interns and fail to treat them with respect. Your business can better utilize paid interns since unpaid interns are rarely inspired to do their best work.

The key is “learning opportunities.”

The main objective of an internship (paid or unpaid) is to provide training for an ambitious student. It is not getting free labor. Paying students for performing in a real-world situation is a win-win for everybody.

Regardless of the circumstances, employers have the responsibility to teach. Offering compensation makes it easier to comply with the law, but if your business meets the six criteria, it is not required. However, for unpaid interns, the employer has a higher requirement to fit in education as part of the work.

If you are not sure about hiring interns, check with a lawyer.

For a small business, the incorrect classification of an intern is a costly mistake. For more information or questions, visit the Department of Labor website or speak with an experienced labor and employment attorney.

 

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