by Patricia Schaefer
Last Updated Monday, April 5, 2021
Hiring interns can be a win-win for both employers and students. Here’s a look at the benefits of hiring interns as well as training considerations and what the law says about paying interns.
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A few summers ago, Business Know-How hired an intern. This Communications major came to us with a 3.95 grade point average, a great work ethic, and a winning smile. She learned and performed her job duties with speed and precision. This same intern went on to finish the summer by independently making up shipping charts, product boards, and new templates that we still use today.
At the end of the day – or more aptly, at the end of the summer – the experience acquired by our intern was a valuable addition to her resume and helped lead to future gainful employment. And Business Know-How got its money’s worth as the recipient of the intelligent work contributions of an enthusiastic and amiable college student.
Similar to our own experience, internships can be a win-win for both students and small businesses, but hiring interns may not be right for every employer. There are a number of considerations to be made to help determine if this particular work arrangement would suit your place of business:
The Employer’s Role in the Internship
Before you hire an intern, keep in mind that the student should optimally be afforded the following:
- Real-world work experience in a field related to their major
- A work environment that has systems in place to handle routine duties
- One or more employees who will have the time and patience to train, mentor and supervise
- A professional work environment that will be welcoming, communicative and supportive
- Compensation in the form of payment, on-the-job training and/or college credits
An Internship Can Be a Good Investment for Your Business
Hiring an intern can prove to be a very cost-effective endeavor for your business, and when well-managed, can significantly increase workplace productivity. When trained, interns can often fill in for people on vacation, help reduce workloads, and provide a wealth of valuable contributions to small and large businesses alike.
For small businesses in particular, interns can offer expertise in areas where a business may be lacking, and provide insight into developing a more successful future:
- Social media launch and/or development
- Assistance with digital marketing
- Website design and development
- Helping with small projects
On the flip side, training and supervising an inexperienced and immature intern could turn out to be costly. When interviewing a prospective intern candidate, be sure to look for qualities of punctuality, maturity, and professionalism in addition to assessing an intern’s level of competence.
Internships as a Recruiting Tool
More than ever, companies today are looking at internships as a great recruiting tool. In fact, some organizations hire interns with the sole purpose of training future full-time employees. And that’s because internships can be a dependable way to find someone who will be a good and productive fit for your organization. At the same time, it allows interns a chance to see if they enjoy working in a particular field and to determine if your company is a good professional and cultural fit.
Hiring interns with a good work record as full-time employees can save employers time and money that would have otherwise gone to attracting, interviewing and training viable job candidates. To sweeten the pot, studies show that the retention rate of employees who starts out as interns is higher than those who do not.
Most interns at for-profit companies are paid at least the minimum wage these days. That’s due in part to the requirements under the US Fair Labor Standards Act, which in many cases considers interns as employees who must be paid. The courts have determined that whether or not an intern needs to be paid depends on seven factors that determine the primary beneficiary of the work. This is known as the “primary beneficiary test”. Those seven factors are:
- The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
- The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
- The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
- The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
- The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
- The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
- The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
The “test” is flexible, and no single factor is determinative. Accordingly, whether an intern or student is an employee under the FLSA necessarily depends on the unique circumstances of each case.
If the individual circumstances indicate the intern is an employee – for instance, if relatively little training and coordination with school curriculum is provided and the intern is performing duties you’d have to pay an employee to do – the employer is required to pay at least minimum wage and follow overtime rules.
Employers can visit the Wage and Hour Division website at https://www.dol.gov/WHD/flsa/index.htm for additional information or clarification on employment laws in the US.
Consider the Intern’s Financial Needs
In challenging economic times, an unpaid internship can present quite a financial hardship for struggling students. One local college student commented on his own recent internships: “I had two internship experiences; the first being an unpaid internship for a campaign, and the second a paid internship for a labor union. The unpaid internship was rough because you’re still putting in all the hours of a regular job but not making a dime. Worse, you need to pay for your own commuting expenses, so it ended up costing me money to work. It’s something you have to do to get work experience for a real paying job though… I guess it pays off, in the end, one way or another.”
Willy Franzen, a former intern and founder of Onedayonejob.com, posed a question in his blog “Are Unpaid Internships Illegal?” … “If an employer can’t figure out how to put you to good enough use to make more than minimum wage off of your labor, is it really a company that you want to be interning for?”
Virtual internships are on the rise, where students work on specific tasks off-site and then check in with their work supervisor on a regular basis. What’s typically needed of the student is a cell phone, computer, and Internet access. Research, information technology, marketing, sales, and social media development are some of the more common remote tasks of virtual interns.
For students, the benefits of virtual internships include saving money on commuting costs and being better able to fit work time into busy school schedules. It also opens up a vista of intern opportunities that do not rely on geographic proximity, particularly for students who live in isolated areas or have a lack of public or private transportation.
A small start-up entrepreneur with limited office space might fare well with a virtual intern. Other benefits to employers include having a larger pool of students to choose from and saving on things you won’t need to furnish, like computers and office equipment.
But with a remote internship, are students getting a true internship experience? And can employers properly train, supervise and receive optimal productivity from a person 3,000 miles away they’ve never met?
For students who don’t mind the absence of a physical work presence and the camaraderie an office experience can provide, virtual internships are a viable option. And employers need to take care that the student is an independent self-starter who can work productively without frequent supervision.
How to Get Started
OK, you’re ready to take the plunge. You’ll need to attract and interview candidates for your intern position. If you’ve got a decent social media presence, it could be as easy as posting internship positions on Twitter and Facebook. You can also contact local high schools, colleges, and universities where career counselors can match students’ strengths, abilities, and majors with your company needs. Sites such as Internships.com, Enternships.com (for entrepreneurial internships), and Internweb.com are also good resources and many allow employers to post internship listings for free.
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About the author:
Patricia Schaefer is a staff writer for Business Know-How.