Jim, the owner of a mid-sized marketing firm, couldn’t be happier. He had brought in two college students as unpaid interns for the summer. They were looking for industry experience, and he put them right to work doing general office duties. Money was tight, and he could put off hiring an office worker for a few months. Will Jim have a problem?
There is no restriction on hiring paid interns. However, if they are unpaid, they must qualify as “learners” or “trainees.” Under federal law, there are six criteria for determining unpaid trainee status, all of which you must meet. Unpaid interns cannot displace regular employees; are not guaranteed a job at the end of the internship (though you may decide to hire them at the conclusion of the experience); not entitled to wages during the internship; must receive training from your organization, even if it somewhat impedes the work; must get hands-on experience with equipment and processes used in your industry; training must primarily benefit them, not the organization.
In other words, companies may not use internships as “free labor.” When in doubt, it may be wise to offer at least the minimum wage to interns. This avoids possible liability for back pay and taxes plus fines if the unpaid intern later claims they should have been paid.
You should also have a written agreement with the intern (paid or unpaid) outlining beginning and ending dates of employment, compensation, duties, company policies and confidentiality.