To Pay or Not to Pay: The Intern Dilemma

By Matt Vaadi

 

All around the country, thousands upon thousands of interns are receiving valuable training, being groomed for a full-time job after college, or losing hope in America as they watch how big corporations operate. That’s right, it’s that time of year again: Intern season!

What is your intern strategy? Yes, I said Intern Strategy. Make sure you are not hiring an intern with no strategy on what you hope to get out of it, but more importantly, make sure you are paying them if you should be.

Should I pay my interns?

Let’s ask Google:

 

The number one hit when you search for unpaid internship is, “Welcome to the Unpaid Interns Lawsuit Website”. So, that is why you might want to pay your interns unless they meet certain criteria.

When should an intern be paid?

The short answer is; most of the time. The Fair Labor Standards Act (FLSA) tells us that interns usually need to be paid for their services to employers in “for-profit” private sector internships. Unless a person is just training, they should be getting paid.

In order for an intern to be unpaid, they need to meet all of the following criteria:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is only for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

 

 

There are several exceptions to this for nonprofits, and state and local governments, but the FLSA definition of employment is so broad that you will find the definition of “unpaid intern” to be very narrow.

The Department of Labor (DOL) will look at the intern’s training through the lens of the “Primary Beneficiary.” If the internship is structured solely as an academic experience for the intern, and there is little to no benefit or work being performed for the employer, then you might have a case.

If you believe the internship is eligible to be unpaid and you really are just training the student to get better at a skill or trade, here are a few things you should do to make sure you are fully compliant:

• Make the internship a fixed duration
• Do not position the internship as a “trial period”
• Make sure that the intern is not performing tasks that will benefit your company

The other side of this coin is most of the people I talk to that don’t want to pay interns are the ones who want to get the most out of them. In that case, just pay them and move on.

Intern programs are awesome. You can get an educated, motivated person to assist your staff and identify potential full-time employees in the process. Internships can be a win for companies of all sizes. Make sure you also make it a win for the intern and pay them what they are due if they are performing work for your company.

If you are looking for more tips on how to avoid mistakes when hiring interns and other employees, join us for the Hiring Workshop on July 16th.

 

 

Thanks for reading.

Matt