Legal Minute: 6 Important Tips for Hiring Unpaid Interns

So you’re a new business owner in need of personnel. Thank goodness for unpaid interns willing to trade in their time for experience. Before you set your eager new intern to work, here are a few things to keep in mind to avoid any missteps.

According to the U.S. Department of Labor and the California Department of Labor Standards Enforcement, there are certain standards that employers must follow when taking on unpaid interns. These requirements are intended to ensure the intern is receiving a valuable learning experience, and not just providing free labor.

In order to determine whether a person is an employee or a non-employee (intern), there are six factors that must be considered by for-profit businesses. If all factors are not met, the intern is legally an employee who must be paid minimum wage, earn overtime, and receive all other protections guaranteed to employees by Federal and State laws.

Interns should not merely be assigned “grunt” work, such as filing, assisting customers, and other clerical work. Rather, the intern should be assigned projects that resemble what students would learn in a training or educational course. The more the internship provides the intern with skills that can be applicable in settings beyond the particular employer’s operations, the more likely the internship will be permissible.

A recommended way to comply with this factor is to write a policy for the internship program outlining the educational goals of the internship and the training that will be provided to reach those goals. The policy should be distributed to interns at the start of the internship.

Similar to the first factor, if an employer provides hands-on training and constant supervision, then it is likely that the intern will learn skills that will benefit him or her in future endeavors. While clerical tasks may teach the intern a new skill or improve his or her work habits, it is obvious that an employer is the one receiving the benefit, not the intern.

Again, having a written policy for the intern to receive upon the start of the internship allows the intern to see the ways in which he or she will hopefully benefit from the experience.

It is important to remember that interns are not to be treated as employees. If an intern is essentially performing the same tasks as an employee, then he or she is entitled to wages.

This is not to say an intern cannot perform any work. An intern may perform tasks that another employee would normally do if the intern is closely supervised while completing the tasks. This interpretation assumes that the intern is not boosting the employer’s overall productivity because the supervising employee is teaching, instead of performing his or her own tasks.

Out of all of the factors, this one is arguably the most devastating to small businesses. An intern, for instance, cannot deliver mail, sort files, organize a person’s calendar, conduct market research, write reports, or any other job that assists the employer in any way in running their business.

An internship program should always be designed to benefit the intern and any benefit to the employer is incidental, not the other way around. Since learning comes from doing, there is inevitably going to be some benefit to the employer, but it should never outweigh the benefit to the intern.

It is essential that the intern has a clear understanding of the internship’s temporary duration. If it appears to the intern that participation in the internship program is necessary for future employment, or if the internship is treated as a trial period before employment is offered, the employer will be in violation of this factor. To comply, an employer should make clear from the onset of the internship that the intern is not entitled to a job.

An easy way to satisfy this factor is to have all interns sign and date a document that states he or she understands that the completion of the internship program does not entitle him or her to a paid position.

Again, a signed form or statement saying that the intern understands he or she is not entitled to wages or any other compensation for the time spent in the internship would be sufficient to satisfy this factor. The form or statement may be combined with factor five to save paper.

Noncompliance with the above can result in the intern being classified as an employee, which entitles him or her to wages, and could also result in litigation and/or penalties against the employer. Remember, unpaid interns are great for startups, but the secret to keeping them great is in the six factors.

Disclaimer: The information in this article is presented for informational purposes only, and should not be taken as legal advice. Before acting on any information presented in this article, you should consult an attorney regarding the facts of your specific situation. We would love to hear from you, so please feel free to contact us for a consultation.

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