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 […]