Internships are often a benefit for both employer and intern. Interns get real-world experience and employers get extra help and an opportunity to get to know a potential future employee. Many employers may have gotten their start as an intern so there’s also the “pay it forward” factor.
Due to legislation changes over the past years, internships are more complicated than they used to be from an employer standpoint. Employers need a plan for the work so that the intern makes good use of the time for both parties. There are also compensation rules from the Fair Labor Standards Act (FLSA) that employers must know and consider prior to hiring. First, here’s how to make an internship valuable for the company and the student/intern:
- Provide a variety of learning opportunities. If possible, consider how the intern may work across the organization. Create a written plan, and follow up regularly to see how the plan is working.
- Designate one person to act as a mentor. Even if the intern works in several different departments, having a single person available for guidance is helpful for both the intern and the company. Time together with a mentor relationship creates an invaluable experience.
- Anticipate networking opportunities. The intern will be looking for a job at some point, and an internship provides a start for industry networking. Look for ways to help the intern succeed in creating relationships.
Compensation of interns
Under the FLSA, most internships qualify participants as employees. An employer cannot arbitrarily label a position as an internship to avoid paying minimum wage or overtime. And the same rules apply for employee vs. independent contractor as with any other worker. Below are general guidelines that determine how an employer needs to classify the intern.
To qualify as unpaid, the internship must meet each of the six criteria set by the U.S. Department of Labor:
- The internship is similar to training which would be given in an educational environment.
- The internship experience is for the benefit of the intern.
- The intern does not displace regular employees but works under the supervision of existing staff.
- The employer doesn’t receive any immediate advantage from the activities of the intern, and may even be disadvantaged as a result of providing training.
- The intern is not necessarily entitled to a job after the internship ends.
- The employer and the intern agree that no wages will be paid for the time spent in the internship.
Employees vs. independent contractor
Because internship activities are largely directed by the employer, employee rules typically apply. Below are the rules that would qualify an intern as an independent contractor:
- The worker/intern directs his or her scheduling of time.
- The work performed is not an integral part of the employer’s business.
- The worker/intern invests in equipment or marketing to perform work for more than one company.
- The worker/intern isn’t economically dependent on the employer; he or she is conducting his or her own business.
Other than the above criteria, the intern must be treated as an employee for labor rules and taxes. The same rules apply whether an internship is for the summer, a semester or all year long.
Various schools and employers have different rules regarding credit, so internships may or may not qualify for course credit. The intern is the responsible party for working with his or her school requirements regarding course credit.
Internships bring new perspectives to both employers and interns and have the opportunity to be a rewarding experience for everyone.