Everything You Need to Know About Hiring Interns for your Small Business

April 9, 2019・8 mins read
Everything You Need to Know About Hiring Interns for your Small Business

Does your business have the opportunity to train an intern in exchange for valuable work experience? An intern can provide temporary assistance during peak times, and a chance to give back some of the skills and knowledge you (or your employees) have acquired. Hiring interns for your small business can also offer the potential to build a pipeline of similar talent. There are many benefits to hosting an intern program, and many companies can get a lot of assistance getting them up and running.

Large corporations have entire departments dedicated to their intern programs. They recruit on college campuses; evaluate intern applications, grades, and career paths. Small business can take a lot from their model and adapt programming to meet their own needs. It all starts with some planning, then a bit of outreach.

Creating an intern program

Hiring interns for your small business begins with defining what skills or job category your intern program will feature, and it can run the gamut, from skilled trades to office work, retail, and more. The purpose of an internship isn’t to exploit cheap (or unpaid) labor. It’s an exchange of meaningful work that will help ready the student for the workforce, so you’ll want to assure that training is a large part of their time.

Plan at least 10 to 20 hours per week dedicated to guidance and trial work. Create an outline of what you’d want them to learn, how you will teach them, and who will be involved. Build in some tasks that are easily learned and repeatable to reinforce what you’re teaching them (and hopefully get some rote tasks completed), but don’t bring someone in just to catch you up on your mountain of filing – hire a temp for that.

Intern job descriptions

Have an intern job description written and ready before you start hiring interns for your small business. Outline the duties the intern will be required to perform, the training they will receive; how many hours they’ll work, and when. Specify what department/discipline they’ll be working with and include what types of learning experiences they can expect to receive. For example, in a trade internship, students may learn to utilize specific equipment safely and effectively: in a business internship, students may learn to screen resumes or perform short phone interviews.

Internally, you’ll want to have at least one person dedicated to mentor/train them, but a backup is always a good idea in the event of absences or unexpected work.

Making sure your intern program is compliant

Once you have a plan, it’s time to check local laws. The majority of internships in the US are paid at least at the minimum wage. The Federal Fair Labor Standards Act has some exceptions that allow for unpaid internships, but specific criteria must be met that allow interns to work only for the knowledge they’ll gain.

The Department of Labor's “primary beneficiary test” outlines unpaid interns must be receiving training that is similar to what would occur in an actual educational (classroom/lab) environment. The intern cannot replace an employee and the program must be primarily for the benefit of the intern: their presence cannot benefit the employer, and may even impede their operations. Both parties must agree in advance the program will be unpaid. Here are the seven requirements of the "primary beneficiary test" which must be met to ensure your unpaid internship is legal:

  1. Both the intern and 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.
  2. The internship must provide 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.
  3. The internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The internship’s duration is limited to the period in which the intern continues to receive training. In other words, you cannot expect additional unpaid labor after the point which the intern is no longer learning new skills or information.
  6. The intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern. An unpaid intern cannot act as a replacement for a paid employee.
  7. The intern and the employer understand that participation in the internship does not guarantee the intern a job at the conclusion of the program.

Internships for college credit

Most unpaid internships and many paid ones are coordinated through an educational institution, with students typically earning college credit for their efforts. Work with your local college or university program when hiring interns for your small business. Their coordinators can take you through creating a program that meets the guidelines and help you find talent to fill your slots. Written agreements should be signed, and any reporting data (how the student fared on the job) should be submitted at intervals the school requires.

Student learner internships

Specialized student-learner intern programs can be an option for businesses that are willing to hire someone over 16 years of age (over 18 for hazardous jobs). Often coordinated with high schools and trade associations, these programs may allow a business to pay the worker 75% of the minimum wage while working on a part-time basis. Businesses must be registered and approved by the US Department of Labor at the federal level (often additional registration is required at the state/local level) and the student must attend an accredited school.

Some schools also require students to maintain a specific grade point average throughout their time spent in the program. Work with your local high school, junior college, or a trade school that has a program aligned with your needs. They will most likely be able to help you align the student’s curriculum needs to yours. Again, written agreements and reports must be completed.

In California, student interns can be paid a portion of the minimum wage if they meet the California Division of Labor Standards Enforcement requirements for a “trainee.” These regulations mirror those at the federal level with a few additional clarifications.

Sourcing interns

If you’ve worked with a school or trade association, they’re likely providing you with candidates, but if you’ve created your own program, you’ll need to look further to fill your slots. Start with local newspapers and even job boards to find talent, and make sure to review intern applications as you would any other job seeker. You’ll want to abide by any laws that would apply to job candidates when hiring interns for your small business. If your state has "ban the box" legislation or laws that prohibit requesting salary information, you’ll need to comply with those, even for unpaid internships.

Paying interns

The federal government does not limit the number of hours an intern can work, (except some F-1 Internships for foreign students), but some states and school work programs may. Make sure you check all your local regulations with regard to number of hours allowed.

Once you’ve hired a paid intern, their compensation is governed by the same laws that cover your employees. If your state minimum wage law is higher than the federal wage, they must be paid at that rate. If overtime is paid over 8 hours per day or over 40 hours per week, their salary must reflect the appropriate additional time compensated (time and a half, etc.). At the federal level, interns do not accumulate sick or vacation time, but state requirements may provide them with sick pay. Always check with your local Department of Labor for any rules that apply in your area.

Hiring interns for your small business can provide mutually beneficial work and learning experiences. These programs are designed to help students ready themselves for careers, but many small businesses find they are just as helpful to the company-- as long as they are conducted respectfully and honestly. The chance to give back, to train potential employees, and to impart a bit of wisdom can be as fulfilling for business as it is helpful to students.

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

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