Landrum Human Resources Companies Inc.
07/24/2024 | News release | Distributed by Public on 07/24/2024 11:27
What You Need to Know about Hiring Summer Interns
Here we are in the prime of summer, and one question Human Resources can be guaranteed to be asked is, what about summer interns? Who can be considered an "intern"? Do I have to pay them? How much?
Summer internships are great opportunities for students and/or inexperienced workers looking to know more about a particular industry or gain practical world experience and real-time career development. It often helps emerging workers identify what they'd like to do from a career perspective, network, and give themselves a competitive hiring advantage in the job market. For employers, the advantages include motivated, receptive, and educated workers who are eager to be in your organization and may help fill a labor shortage in your company. It can also provide an opportunity for managers to be exposed to training opportunities and gain additional experience supervising others.
However, there are hidden pitfalls many employers can overlook, putting themselves at risk for liability and compliance issues. But we're here to help you to identify those potential hazards.
What is considered an Intern?
Courts use a "primary beneficiary test" to differentiate between student/intern status and employee status under the Fair Labor Standards Act ("FLSA"). The test allows courts to examine the "economic reality" of the intern-employer relationship to determine which party is the "primary beneficiary" of the relationship. But keep in mind that no single factor is more important than another, and whether an intern is an employee under the FLSA depends on each unique situation.
The test considers seven primary factors and how they apply to the intern-employer relationship. Per the Wage and Hour Division of the US Department of Labor ("DOL"), the conditions to assess an internship scope are specific. You can read all the conditions in detail (Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act | US Department of Labor (earnlearn.us)), but the primary summary is as follows:
It is a recommended best practice that student interns should be paid at least minimum wage. Especially since, in many circumstances, these individuals will be working with or alongside your regular employees, often doing the same or similar tasks, and should be compensated for that work. Technically, they could be considered professionals in training.
If there is ever doubt about whether an internship should be paid, the safe option is to make it paid. The determination of whether the student you consider an intern might be an employee under FLSA and, therefore-entitled to pay-weighs heavily on whether the position provides the "intern" with professional experience that furthers their educational goals and has a clear and direct link to their primary focus of study. However, if the "interns" are performing work usually done by employees and aren't receiving training and close mentoring, they should most likely be paid.
It's important to keep in mind a paid internship typically has less risk than offering an unpaid internship where such risks could include an audit, lawsuit, or negative publicity.
How much do I have to pay them?
Keep in mind that while the FLSA doesn't define "intern" or have an exemption status from minimum wage or overtime for them, employers considering using interns should adhere to FLSA minimum wage and overtime pay. Typically, interns will not be exempt (meaning exempt from overtime), either because they do not meet the duties and responsibilities test for any of the exemption classifications or because they are paid less than the statutory minimum salary, which can be dependent on your state or county.
What are some best practices to begin an internship program at my company?
Start early to develop a well-rounded program to avoid issues of status, job responsibilities, and expectations. Create an internal policy and practices that define the program and explain the compensation and eligibility. This can help to reduce misunderstandings that may lead to future litigation. Train your managers to reduce misunderstandings of promises of future employment and emphasize the at-will status of the position.
When it's applicable, work directly with the intern's college or high school explaining the educational relevance of the internship and if it will earn the student credits, particularly if the business is exploring an unpaid internship.
And finally, make sure you comply with child labor laws that may affect the age groups of your interns. Be aware of any state or county limitations on intern hours or types of positions that can be held.
The DOL's recent increased involvement in matters regarding the classification of employees means that employers should exercise caution when hiring summer interns. The good news is that LandrumHR is happy to support you and your business in creating policies, reviewing compliance with federal and state employment and labor laws, or providing guidance on the classification of employees.
Summer internships are great opportunities for students and/or inexperienced workers looking to know more about a particular industry or gain practical world experience and real-time career development. It often helps emerging workers identify what they'd like to do from a career perspective, network, and give themselves a competitive hiring advantage in the job market. For employers, the advantages include motivated, receptive, and educated workers who are eager to be in your organization and may help fill a labor shortage in your company. It can also provide an opportunity for managers to be exposed to training opportunities and gain additional experience supervising others.
However, there are hidden pitfalls many employers can overlook, putting themselves at risk for liability and compliance issues. But we're here to help you to identify those potential hazards.
What is considered an Intern?
Courts use a "primary beneficiary test" to differentiate between student/intern status and employee status under the Fair Labor Standards Act ("FLSA"). The test allows courts to examine the "economic reality" of the intern-employer relationship to determine which party is the "primary beneficiary" of the relationship. But keep in mind that no single factor is more important than another, and whether an intern is an employee under the FLSA depends on each unique situation.
The test considers seven primary factors and how they apply to the intern-employer relationship. Per the Wage and Hour Division of the US Department of Labor ("DOL"), the conditions to assess an internship scope are specific. You can read all the conditions in detail (Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act | US Department of Labor (earnlearn.us)), but the primary summary is as follows:
- Intern and employer clearly understand the terms of compensation.
- Internship provides training that would be similar to the training received in an educational environment.
- Internship is tied to the intern's formal education program by integrated coursework or earning academic credit.
- Internship accommodates the intern's academic commitments by corresponding to the academic calendar.
- The duration of the work provides the intern with beneficial learning.
- Intern's work complements, without displacing, paid employees' work while providing the intern with significant educational benefits.
- The intern and employer understand that there is no guarantee of a paid position when the internship ends.
It is a recommended best practice that student interns should be paid at least minimum wage. Especially since, in many circumstances, these individuals will be working with or alongside your regular employees, often doing the same or similar tasks, and should be compensated for that work. Technically, they could be considered professionals in training.
If there is ever doubt about whether an internship should be paid, the safe option is to make it paid. The determination of whether the student you consider an intern might be an employee under FLSA and, therefore-entitled to pay-weighs heavily on whether the position provides the "intern" with professional experience that furthers their educational goals and has a clear and direct link to their primary focus of study. However, if the "interns" are performing work usually done by employees and aren't receiving training and close mentoring, they should most likely be paid.
It's important to keep in mind a paid internship typically has less risk than offering an unpaid internship where such risks could include an audit, lawsuit, or negative publicity.
How much do I have to pay them?
Keep in mind that while the FLSA doesn't define "intern" or have an exemption status from minimum wage or overtime for them, employers considering using interns should adhere to FLSA minimum wage and overtime pay. Typically, interns will not be exempt (meaning exempt from overtime), either because they do not meet the duties and responsibilities test for any of the exemption classifications or because they are paid less than the statutory minimum salary, which can be dependent on your state or county.
What are some best practices to begin an internship program at my company?
Start early to develop a well-rounded program to avoid issues of status, job responsibilities, and expectations. Create an internal policy and practices that define the program and explain the compensation and eligibility. This can help to reduce misunderstandings that may lead to future litigation. Train your managers to reduce misunderstandings of promises of future employment and emphasize the at-will status of the position.
When it's applicable, work directly with the intern's college or high school explaining the educational relevance of the internship and if it will earn the student credits, particularly if the business is exploring an unpaid internship.
And finally, make sure you comply with child labor laws that may affect the age groups of your interns. Be aware of any state or county limitations on intern hours or types of positions that can be held.
The DOL's recent increased involvement in matters regarding the classification of employees means that employers should exercise caution when hiring summer interns. The good news is that LandrumHR is happy to support you and your business in creating policies, reviewing compliance with federal and state employment and labor laws, or providing guidance on the classification of employees.