Legal regulation for employers who use interns

Internship is a great opportunity for recent graduates or people changing careers to enter new professional field. For the companies it’s a good way to see a person at work before making a hiring decision. It is also a very attractive setup for startups, which allows them to get qualified labor without trading equity or extending limited financial resources.

 

However, there are some very serous legal requirements concerning internships that entrepreneurs should be aware of. Under federal law, every employee in America is entitled to a minimum wage. An employment relationship is also subject to worker’s compensation, discrimination laws, state labor laws and unemployment insurance coverage. If during the company’s audit it is determined that a person is actually should be qualified as an employee rather than an intern because of the workload and requirements he/she is handling, and accordingly should be paid not less that a minimum wage, the company will incur significant penalties.

 

The Department of Labor follows the following test to determine whether a person is an intern, and therefore is not subject to federal and state laws governing the employer-employee relationships, or not.

 

        1. The internship, even though it includes handling tasks for the business of the employer, should be similar to training which would be given in an educational environment;

         

        2. The internship experience should be for the benefit of the intern;

 

        3. The intern should not displace regular employees, but instead should be working under close supervision of the existing staff;

         

        4. The employer should provide the training to the interns and should not derive immediate advantage from the activities of the intern; and the employer should understand that on occasion its operations may actually be impeded because of the intern’s activities;

 

        5. There is no guarantee that the intern will get a job with the employer at the conclusion of the internship; and

         

        6. The employer and the intern understand and both agree that the intern is not entitled to wages for the time spent in the internship.

 

The Department of Labor requires that all of the above-listed factors be met in order to say that an employment relationship does not exist.

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