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October 27, 2015 by Dianne Shaddock Leave a Comment

Why It Is Important to Distinguish Interns From Employees – Especially In Cases of Unpaid Interns

Why It Is Important to Distinguish Interns From Employees – Especially In Cases of Unpaid Interns

The purpose of an internship ideally is to provide in-house training for students earning degrees or certificates in their chosen field of study. Historically, internships were not always a paid opportunity, although trends over time show that the majority of internship opportunities are now paid which is great for the student.

Unfortunately for employers and sometimes the student intern, the lines between whether the student is an “intern” versus an actual employee can become a bit hazy; particularly in the case of unpaid interns. When is an intern just that versus an employee and what is the difference?

Here are some basic guidelines:

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What is an Intern?

An intern is for all intent and purposes a student or trainee who is onboard for the primary reason of learning more about the business, which should include hands-on training working on tasks that directly align with their educational goals. Often, a college requires an internship before the student is able to graduate.

So, What Is the Difference Between an Intern and an Employee?

It is vitally important to understand how you approach utilizing an intern because of protections that are in place specific to pay, taxes, and more.

The type of work that you may have an intern perform has to specifically benefit the interns educational goals for the most part. This is were the waters can get quite muddy for employers in ways that can put you at risk for violating Department of Labor, (DOL) requirements for working with interns.

The DOL – and the courts will look at the following points to determine if you are using interns appropriately, (especially if the intern is unpaid):

  • The trainee has adequate supervision and instruction from the company.
  • The company does not receive the primary benefit of any work completed, (as one would with an employee).
  • The trainee does not perform work that would otherwise be handled by a paid employee, therefore causing the business to have fewer paid employees as a result of the internship.

You can read the full criteria here.

Why is This Important? Legal Ramifications

Businesses that do not follow best practices or the laws regarding employees can be penalized in a variety of different ways if the courts determine an intern was actually performing the tasks that your organization would normally hire an employee to perform. Specific to unpaid interns, your company may be deemed to be in violation of tax laws, wage and hour laws, immigration laws, worker’s compensation laws, and other laws that protects the rights of actual employees. Your company may also face audits, substantial civil fines and penalties, or be sued in a court of law.

Remember, a student is not an intern just because you obtained the student through working with an accredited school.  The type of work that the student is performing and more importantly, the training provided is key. You will need to be extremely cautious and be sure that the intern is being trained in their area of study in ways that benefit the student.  If the intern is spending most of their time working on tasks that do not enhance their educational goals, it is not an internship.

The key here is that at the end of the internship the tasks and training should enhance or compliment their classroom learning as well as bolster the interns’ ability to obtain a job in their chosen because they learned specific skills that aligned with their field of study.

Be sure to reach out to your HR representative or an employment lawyer if you are unsure as to whether you are in compliance with best practices.

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Dianne Shaddock

President and Founder at Easy Small Business HR
Get more tips on interviewing, hiring, managing and engaging your employees. Dianne Shaddock is the President of Easy Small Business HR, Employee Hiring and Managing Tips and the author of the eGuides, "How To Supervise:  What Your Boss Never Told You Before You Took the Job", A Step-By-Step Guide For New and Seasoned Managers and "How To Find and Hire the Best Employees".
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Filed Under: Employment Law, Fair Labor Standards/FLSA, Recruitment/Interviewing/Hiring, Supervisor Tips and Strategies Tagged With: FLSA requirements for interns, hiring interns, Interns versus employees, unpaid internships

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