Tips For Hiring an Intern Legally

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Tips to Hiring an Intern Legally

Done correctly, taking on or hiring an intern is a win-win proposition. The students gain valuable work experience and the chance to prove that they’re worth considering for full time work (either at your company or elsewhere). Your company benefits from adding creative talent at low or no cost.

Here’s the thing, though: There are some rather sticky legalities about hiring interns. If you don’t follow the letter of the law, it can really come back to bite you.

In order for an internship to be legal, it has to benefit the student. That means one of two things. Either:

  • The student is being paid, or
  • The student is receiving college credit.

The Fair Labor Standards Act (FLSA)

The FLSA governs internships and defines what is (and isn’t) a valid internship program. If the internship is unpaid, it must qualify as a trainee program. In order to qualify, it must meet all of the following criteria:

  • The interns must receive on the job training.
  • Interns cannot be used to displace other workers.
  • Interns cannot be offered a guarantee of employment with your company after the program is completed.
  • Interns must be taught skills during the internship which could transfer to other career opportunities.
  • Interns must receive some form of training which is particular to your type of industry.
  • The intern must know ahead of time that he is not entitled to wages or compensation.
  • Your company cannot receive “immediate benefit” from the intern’s activity.

Failure to follow those set in stone criteria accounts for most of the mistakes businesses make with interns. Those kinds of mistakes can be costly, causing your business to run afoul of the Federal Department of Labor.

Paid internships offer you more leeway, since there is a clear benefit to the intern. With paid internships, the laws are similar to hiring any other employee. The major difference is that you have much more wiggle room when it comes to terminating an internship than an actual employment. For example, if you end an internship, you’re not required to pay unemployment benefits.

Other Common Mistakes that Could Get Your Business in Trouble

There are a number of other mistakes which can get you in trouble. A few common examples include:

  • Using international students as interns without the proper approval. International students are allowed to participate in internships, but there are a few additional hoops they need to jump through. Essentially, this amounts to receiving a letter from you, which they will use to obtain work permission from their college administration.
  • Not covering interns under worker’s compensation. As long as you’re not paying your interns, you’re not necessarily required to cover them under worker’s compensation. However, failure to cover them can expose you to more liability than it’s worth.
  • Not adhering to Equal Opportunity Employment guidelines. Interns are not specifically covered under EOE. Still, you’re inviting a lawsuit if you give a college student a viable reason to believe they were discriminated against based on any protected status.
  • Accepting interns whose educational/career goals don’t line up with the training provided. If you have a student who is studying to be a social worker, you can’t add them to the internship program in your machine ship just to get a cost effective go-fer. If your program doesn’t further the intern’s goals, then it isn’t an internship and you need to pay them minimum wage or higher.
  • Not treating the selection process as you would the hiring process. You want interns who will bring something of value to your business. The interns want a training program which will help them advance their career and educational goals. If you don’t treat the selection and interview process as you would the normal hiring process (for paid employees), neither of you are likely to get what you want.

The Sticky Grey Area

Technically, to be considered an internship or training program, you can’t expect the interns to produce work of immediate value to you or your business. Still, truth be told, most companies who use interns do manage to get some productive work out of the interns.

The main issue here is that the interns need to be getting something of value. In order to keep you out of hot water with the DOL, your program needs to benefit the interns more than it does your company. That’s not to say that your company can’t benefit from the efforts of interns. It is to say that your internship program needs to be clearly designed to be primarily of value to them.

Why You Should Consider an Internship Program Anyway

There are definite benefits of having an internship program, even though you can’t design it to give immediate benefit to your company. The real benefit for most companies comes in being able to screen out future hires.

A solid internship program allows you to screen out the best candidates. When you offer an intern a paid position, you get an employee who has already proven their aptitude and has a serious head start on the training they need to be an asset to your operation.

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Dominique Molina

Guest Post: Dominique Molina is President of the American Institute of Certified Tax Coaches, an organization of tax professionals who are trained to help their clients rescue thousands of dollars in wasted tax and is a registered educator with the National Association of State Boards of Accountancy (NASBA). In addition to her blogging and speaking engagements, Dominique also provides engagement letters, accounting marketing and a range of accounting templates to her clients.

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