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What You Need to Know About Hiring Interns

One common concern (or something that should be) regarding interns is the laws governing their work and their payment. Are unpaid interns legal? The answer is, as is so much in life, it depends. So let’s talk about what it depends on and how to steer clear of legal entanglements when hiring interns.

You Need to Know the DOL Rules/Labor laws

There are a number of Department of Labor rules governing internships. The most important ones talk about how to tell if an unpaid internship is okay or an intern must be paid based on existing labor laws. This would mean paying a minimum wage and overtime.

Whether Your Intern will be Paid VS Unpaid

When an intern is paid, they are treated much like a regular employee, although typically they are kept at part time status to reduce costs such as insurance. When they are unpaid, a new set of rules applies to keep the company in compliance with the laws.

If You Need to Provide Workers’ Compensation

One of the more complex areas for interns is how Workers’ Compensation insurance is handled. This is typically defined on a state by state basis, so investigation into these rules are crucial.

Non-Profit Interns Have Different Rules

For Profit businesses need to be aware of all the Department of Labor rules, but Non-Profits have an additional option. Interns can be classed as volunteers which makes them unpaid but may release them from some of the other rules For Profit companies must follow. This is a tricky area, so research this for your individual situation.

Who will be the Primary Beneficiary?

The DOL rules center around the concept of who is the primary beneficiary. Who benefits from the internship relationship. To be able to have unpaid interns, the beneficiary must be the intern, not the company.

One of the rules states there must be no promise of compensation to the intern for their work. If you promise to pay them, or compensate them in some other non-monetary way, they are unlikely to be considered a valid unpaid intern.

Having the benefits lean mostly to the intern is a good way to safeguard your company against violations. If you are looking for more benefits for your company, you may need to consider leased employees, such as ones offered by the best PEO companies.

You Must Provide Valuable Training

The internship must provide transferable training, similar to a vocational school course, for it to be considered of benefit to the intern. Unpaid interns must be provided training that truly benefits their future career and current education.

An unpaid intern cannot perform duties that would allow a company to use them instead of an employee. If an intern is performing work that an employee would normally do, they are considered an employee and must be paid as such.

More importantly, you need to nurture and actually care for interns as career professionals. The intern must be able to earn credits as part of their formal education. If colleges and universities would not consider giving credits for the internship, it cannot be unpaid.

Corresponds to Academic Calendar

Interns must be able to fit the internship into their academic calendar. The majority of these are during the summer break. If the internship does not take this calendar into account, it cannot be unpaid. Internships are for a limited period, not a permanent position. Unpaid internships must have a defined period after which they end.

Detail Your Position’s Description

Make sure you create a well-rounded job description for your internship program. Potential interns should be clear what will be expected of them if they get the position. This is a good place to put information about how you will stay in compliance with the unpaid internship rules. Note that the projects worked on will not be ones that are already planned to be done by employees, the period of time and how it does not conflict with school, and the training provided that will allow interns to ask for credits.

Make Air-Tight Contracts

Create a clear and simple contract for the interns to sign. Lay out the ways the company will avoid violating the rules governing unpaid interns and add a clause instructing interns to notify the company if they are asked to perform work that would violate these rules.

Since unpaid interns are not employees, some of the employee protections, such as ones against discrimination or harassment, do not apply to them. Take extra care to protect them from these sorts of things to avoid later legal entanglements.

Conclusion: The Big Picture

While unpaid internships may seem like a very attractive option, the penalties for violating the rules governing them are severe. In addition to legal penalties, you will likely be forced to pay the wages owed as well. If there is any question on whether having interns at your company will benefit you, having paid internships may let you avoid many legal headaches.

Internships are popular and beneficial programs helping students enter the workforce and helping companies find new hires already familiar with their work environment. Don’t be afraid to have an internship, just be sure you know how to decide on paid or unpaid interns and how to follow the rules laid down for them.