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Make the Most
Out of Interns
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There may be no such thing as a free lunch, but there is free or low-cost help.
With college students looking for internships, there might be a pool of eager and talented people who are willing to work at your company for free or minimum wage — at least for a while.
These arrangements can benefit both sides: Your company gets help and the interns learn valuable new skills. But make sure you comply with all the federal and state laws relating to interns. In some cases, companies decide the free lunch isn't worth it and opt to pay interns the minimum wage to avoid legal liability.
It takes common-sense steps to help ensure the intern experience is successful:
Interview. Don’t skip a formal interview — if you don’t have the time, have a trusted assistant do it. Face time helps determine if a candidate is right for the job.
Take the usual steps. Even if a prospective intern is impressive in an interview, ask for a resume and references. Inquire about criminal convictions and serious motor vehicle violations. Get permission for a background check.
Outline the job. Describe the duties, the training that will be provided, the hours and who will supervise the volunteer.
Watch the law. Make sure your intern isn’t replacing an employee and doesn’t hinder opportunities for prospective employees. The federal Fair Labor Standards Act (FLSA) bans both practices and many states impose additional restrictions. Regular volunteers are exempt from the FLSA, which regulates minimum wage and maximum work hours, among other things.
The FLSA applies to businesses with two or more employees grossing more than $500,000 yearly but it can also apply in other situations. Among its provisions:
1. An intern must be the main beneficiary of the volunteer service, by picking up benefits such as valuable experience or college credits. The training should be a learning experience for the student.
2. If the employer gets an "immediate advantage" from the arrangement, the intern must be paid minimum wage.
3. The type of business is important. Public service, charitable, religious or humanitarian organizations have an easier time using volunteers under the law. For-profit companies are more restricted because the FLSA is designed to protect the "employer-employee" relationship.
4. There can't be productivity requirements, an expectation of payment, or the promise of a job. It's prudent to put this in writing before taking on an unpaid intern.
5. A potential red flag: Volunteers are not typically covered by Worker's Compensation Insurance, so an injured intern could sue your company for medical bills and damages. Some organizations decide to avoid this potential liability by putting volunteers on the payroll at minimum wage.
Interns can be among your most enthusiastic staff members and some of them might return in a paid capacity someday. In addition, they can serve as a walking advertisement for your company and a magnet for future students from local schools. Just make sure you keep your expectations realistic — few 19-year-olds have the judgment of 35-year-olds. And be careful to follow applicable laws when bringing in interns. Consult with your human relations specialist for more information.
As a service to our readers, we will sometimes provide valuable information which may be outside our broad areas of expertise. We encourage you to work with your other professional advisors on these topics. |
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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