Companies offer paid and unpaid internships for many reasons: building their talent pipeline, training and educating potential hires, testing whether potential hires are a good fit, and enhancing their ties to colleges and universities, as well as the local community.
When done well, internship programs can enhance employers' recruitment and retention efforts, as well as employee satisfaction.
To achieve these positive results, it's crucial that HR professionals and supervisors understand the legal obligations that apply to paid and unpaid internships. State and federal laws regulate when interns should be considered employees and therefore are entitled to minimum wage, overtime pay, workers' compensation and other protections.
Employers should stay abreast of any changes to state or local laws regarding unpaid interns because "these things evolve on a state and local level," said Jeffrey Ruzal, an attorney with Epstein Becker Green in New York City.
When making arrangements with an intern, be clear about the start and end date of the internship so that it doesn't appear to be a permanent job. Internships are typically considered temporary and often last three months in the summer.
Paid vs. Unpaid Interns
When determining whether someone should be classified as an unpaid intern, "the rules are pretty stringent," Ruzal said. "The economic reality of the relationship is foremost."
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