When Must You Offer A Paid Internship?

When Must You Offer A Paid Internship?

A paid internship is often a win-win situation for both parties. The intern gets the work experience which will help them find a job after graduation, and the institution they work for gets the help it needs. It also gives companies an opportunity to scout promising talent. However, one question that many institutions ask themselves is whether or not interns should be paid, and if so, when? The answer to this question is important, as it has legal ramifications.

The Difference between Unpaid Interns and Employees

The FLSA, or Fair Labor Standards Act, offers a list of guidelines which dictate whether an individual is categorized as an unpaid intern or employee. Institutions that don’t wish to pay interns must not profit from them, and must teach them skills that they can benefit from. For example, if an intern conducts research on a subject that you will use to produce a product that you will be paid for, that intern should be compensated as well. Interns that function as receptionists, sending out business related mail or answering phones should also be compensated.

This is a very serious issue, because a growing number of interns are filing lawsuits for providing services which are unpaid. Any time an intern replaces an employee, or performs tasks which are normally done by an employee they should be paid for it.

How Employers Can Avoid Problems

The best way to avoid having problems with interns is to write up a contract which designates their responsibilities, as well as the rate they will be paid for their work. Because unpaid interns are a slippery slope in terms of the legal risks, it is best to avoid them. In other words, an institution should either pay all interns or not hire them at all. This is the simplest and most cost effective away to reduce the risks of being sued because an intern performed unpaid work that should have been given to an employee.

Some institutions choose to hire interns in the form of independent contractors. Under this arrangement the intern will be paid an hourly fee or set rate for the completion of a project, but will be responsible for paying their own taxes. The problem with doing this however is that the IRS sees independent contractors as being individuals who don’t need supervision for the work they perform, which doesn’t apply to the majority of interns.

The Benefits of Paying Interns

In addition to reduced legal risks, there are other additional benefits to paying interns. An institution that is willing to pay will often find that it has a larger pool to select from, which means that it has an increased chance of attracting the top talent. Many students are not able to work for free, and the most talented will not see the need to do so. In other words, an institution that is unwilling to pay interns runs the risk of losing top talent to their competitors, which will hurt them in the long run.