Done correctly, hiring an intern is a win-win proposition. The student gains valuable work experience and a chance to prove that they’re worth considering for full-time employment. In return, your company benefits from creative, fresh talent at low or no cost.
However, there are some legalities to consider when hiring interns. If you don’t follow the letter of the law, you could pay the price – literally.
In order for an internship to be legal, it has to benefit the student. That means one of two things.
a. The student is being paid, or
b. The student is receiving college credit.
Why You Should Develop an Internship Program
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 the best candidates. And if you offer an intern a paid position, you gain an employee who has already proven their aptitude and is equipped with the training they need to be an asset to your organization.
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:
1. The interns must receive on the job training.
2. Interns cannot be used to displace other workers.
3. Interns cannot be offered a guarantee of employment with your company after the program is completed.
4. Interns must be taught skills during the internship which could transfer to other career opportunities.
5. Interns must receive some form of industry-specific training.
6. The intern must know ahead of time that he is not entitled to wages or compensation.
7. 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.