6 factors that determine if you have to pay an intern

Sponsoring unpaid internships can allow employers to help students hoping to someday enter a specific field of work.

Mentoring and training students through hands-on experience can help them gain the skills necessary to achieve success in their future career endeavours.

Bear in mind, however, that the fact that a student is classified as an intern and is learning while on the job doesn’t automatically mean that a company gets free labor.

Paid or unpaid?

Many employers are under the assumption that an internship program is an inexpensive way to increase productivity. The reality is that the criteria for unpaid internships are quite restrictive.

Giving an unpaid intern duties equivalent to those performed by other employees runs the risk of violating wage and hour laws. If an intern claims that he or she was not paid for doing the work of an employee, an employer may be expected to provide back pay, and could be stuck with expensive legal fees.

Take the test

The U.S. Department of Labor has a six-factor test to help determine when an intern may be unpaid. From the department’s perspective, if all six factors are met, an employment relationship doesn’t exist, which means that minimum wage and overtime provisions do not apply to the intern.

For an intern to be unpaid, all of the following factors must be present:

  1. The training is similar to training the student would find in a vocational school
  2. The training is for the benefit of the student/intern
  3. The training doesn’t replace the work of regular employees
  4. The intern is not entitled to a job at the end of the internship
  5. The intern understands he or she is not entitled to wages for the training
  6. The employer that provides the training not only doesn’t benefit from it, but the training may actually hamper normal business functions

This last factor is often where employers get off track when determining whether an internship program should be paid or unpaid. If the intern is performing work that benefits the company, such as filing paperwork, filling out forms, or answering calls, the intern is an employee and must be paid.

On the other hand, if the company does not directly benefit from the work of the intern (for example, instead of having the intern provide specific work for the organization, the intern’s mentor might take time out of regular operations to teach the different aspects of a business and explain how that knowledge could be applied more globally), then the internship might qualify as unpaid.

Lower the risk

Because unpaid internships are actually rather rare, employers must carefully evaluate the relationships they have with interns based on the aforementioned criteria. They may even want to have an unpaid internship arrangement reviewed by an employment law attorney to be sure there is no employment relationship in place.

Source- bizjournals

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