Interns for Your Emerging Company

Emerging companies often establish internship programs as a cost-effective way to find additional help for general administrative activities and specific projects for which the intern may have particularly useful training and experience.  Internships are often made available to the students and may or may not be sponsored by a university or other type of academic institution.

If the company intends not to pay the intern it is important to consider whether or not the internship will nonetheless be characterized as an employer-employee relationship, which means that the intern must be paid at least the minimum wage and may also be eligible for other benefits mandated by federal and/or state law for employees.  If companies want to have a higher level of certainty that interns will indeed by treated as interns under the labor laws the following guidelines from the federal Fair Labor Standards Act should be taken into account when structuring the intern’s activities and responsibilities:

  • While interns may be trained in the use of the specific equipment the company uses in its business the equipment must be similar to the equipment that would usually be available in a vocational school.
  • The decision to bring an intern on board should not displace or replace any regular employees of the business.
  • The intern must be specifically informed, and should acknowledge in writing, that he or she is not entitled to a regular job at the end of the internship period.
  • Both parties should acknowledge in writing their understanding that the intern is not entitled to received wages for receiving training during the internship period.
  • Any training provided to the intern must be primarily for the benefit of the intern.
  • The company should not derive any “immediate advantage” from the internship and the work performed by the intern.

The key to making sure an internship is characterized as such is structuring the activities as an “educational experience,” rather than a poorly disguised strategy for obtaining free help.  It’s OK if the business gets some benefits out of the internship; however, be sure that training and educating the intern is the top priority.  If you work with a university to obtain interns they will usually have their own specific criteria regarding the activities of the intern that must be satisfied in order for the intern to receive academic credit. For example, students from a public policy program are usually limited to internships that provide them with an opportunity to research substantive legislative or policy issues.  By following the university’s guidelines companies can generally be comfortable that they will not run afoul of the labor laws.

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