Interns: Can unpaid interns pay off?

I’m thinking about bringing in a high school intern for my business. Can I do so without paying him or her?

Interns have always been a popular option for businesses that want to save money and cut costs. Interns are typically students working as unpaid employees in order to obtain experience and school credit.

It’s important, however, for businesses to be very careful when it comes to unpaid interns. True interns are usually exempt from having to be paid minimum wage and/or overtime. However, if a business misclassifies an intern, the employer is liable for the unpaid wages.

A good rule of thumb is to use your intern to fill in gaps and do some of the basic work — interns should not be used as replacements for actual employees. “Employees” must be paid a minimum wage, so be careful not to let your intern do the same work as a regular employee.

I recommend contacting the intern’s school to ensure that they are receiving school credit for their internship. Most schools have special internship programs designed to give students real-world experience. The program might require you to fill out certain forms, or follow specific rules about how many hours the intern can work.

Whether an intern is exempt from minimum wage coverage is usually determined using the following criteria, in view of all the circumstances: the training is similar to what would be given in school; the training is for the benefit of the student; the student does not displace a regular employee; the employer does not derive an immediate advantage from the student’s work; the student is not necessarily entitled to a job after the internship; and the employer and student understand that the student is not entitled to wages for time spent in training.

It’s important to understand that the employer cannot receive an immediate advantage from the internship — the relationship should be characterized as more of a contribution to the intern, rather than a contribution to the business.

Employers can get into trouble with their intern policies if they are using interns to replace terminated workers, or they aren’t supervising the interns in an educational role. To avoid this, ensure that your interns aren’t just being given menial work and that they are actually learning skilled labor.

If you decide to hire an intern, it’s a good idea to have a written internship agreement that clearly describes what the intern will be doing. Closely supervise your intern in the workplace to ensure that they are receiving the educational benefit that’s required.