Many small businesses hire interns, both during the school year and over the summer. Internships offer students and career changers a great way to learn more about how business works and what a potential career is like. They offer your company an additional worker and perhaps insights into a different generation or technologies.

However, too many companies think they can just have an intern do some work and not have to pay them. Most internships are paid. Unpaid internships come with very stringent rules. You need to understand the differences to reduce your legal risks.

There are six criteria which must be met to qualify as an unpaid internship. The most important factor for most private sector employers is the similarity to training in an educational environment. Thus if you have an intern who is getting course credit for the work with you and the university/college has specific requirements of you, that often means you are likely to comply with the unpaid internship rules. You still will need a specific agreement with the school or professor and the student to cover the basics.

If you are not hiring an intern as part of a university program for course credit, here are all the federal Department of Labor criteria you must meet:

  • the internship must be similar to training in an educational environment
  • the internship experience is for the intern’s benefit
  • your company derives no immediate benefit from the intern’s activities and may even have your operations impeded
  • the intern works under close supervision and does not displace employees
  • the intern is not necessarily entitled to a job following the internship
  • the intern and your company both understand it is an unpaid internship

Clearly in a case like this, a written agreement on what the intern will learn and what the conditions are – including those above – is critical to protect your company.

It is usually far easier to hire a paid intern. At a minimum, such interns must be paid at the minimum wage and paid time-and-a-half for any hours worked over 40 hours per week. Actual pay depends on the individual’s skill, the work you have the person doing, and the market.

Successful Internships
If you want to gain the most from the intern, take the time upfront to really think about what you want the person to do. This may be some regular work in their area of interest, a special project you have been trying to get to, a new social media push, etc. Use this definition of what you want done as a part of the hiring process for the intern.

Then have a clear discussion when the person starts about the work, the resources, who the intern will work with, and what you expect. This role clarity helps you get the benefit of the intern while offering the individual a way to grow and learn as well as contribute to your business’s success.

Smart organizations use internships as a way to develop future talent for their pipeline as well as to enhance their brand and reputation. Often they bring the intern back during school breaks and in future years – which makes it much easier to get immediate productivity then.

Interns can offer your business the extra help and new insights vital to continuing success. But only if you are smart enough to select and use them effectively!