The NY Times wrote an interesting article this week about the growth of unpaid internships which revisited the question what qualifies as an unpaid internship in the eyes of labor and employment law.
The first thing to note is that as a business owner, hiring staff of any kind requires a basic understanding of the relevant employment rules and regulations. For example: is a worker an employee or an independent contractor? What kind of insurance are you required to carry for full-time employees? What are the tax implications of taking on new employees? These are all questions that need to be answered when building your team, and the issues surrounding interns are no different. (And as a business owner, you’ve probably already figured out that your lawyer and your accountant are your BEST friends.) The current questions are around unpaid interns, so that’s what we’ll address here.
Let’s talk about what unpaid interns are NOT. They are not free labor who can be brought in to do lots of grunt work around your office. That, typically, is an assistant, who needs to be paid. (Could be part-time, but still needs to be paid.) They are not there to replace your entire staff so that you can cut your costs. That, among other things, sounds like you need a new HR plan.
Unpaid interns can be valuable additions to your team, but there is absolutely a give and get involved. You give training, you give supervision, and you give mentorship. You get assistance, you get the opportunity to teach, and you get to know your intern and evaluate if the role can develop into something more meaty. Essentially, you get a long, substantial interview.
As the NY Times article points out, the laws on this topic are murky. There are 6 federal legal criteria on the books defining the scope of unpaid internships, but the interpretation is lacking, largely because of a lack of enforcement activity on this front. But that may change as the job market comes back.
Our advice? Yes, ask your lawyer or a trusted advisor for some input if you have questions about your particular situation. But also, take a common sense approach to what makes sense for your business. As scrappy entrepreneurs, we like to save money when we can. But we also like to save time. If you hire someone unpaid and they NEED the money, their motivation will be to find a paid position, which means you’ll be back in the market looking for someone again before you can say “intern”. Also, let’s call it what it is—money motivates. If you’re on a tight deadline, have a huge new client you need help with, or generally expect someone to work above and beyond for you, you are looking for a new employee. And last but not least, just the word intern conjures up images of teaching moments and life-changing insight. If that’s up your alley, then yes, hiring an unpaid intern can make sense. But if you’re style is more “I needed it five minutes ago,” (and again, no shame in that - we all know the entrepreneurially clock is perpetually on fast forward) than call the position what it is—a J-O-B. Setting expectations correctly will lead to greater satisfaction for everyone involved.