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Interns: Are They Worth the Trouble?

By Sonjui L. Kumar and Belinda Be Email By Sonjui L. Kumar and Belinda Be
August 2014
Interns: Are They Worth the Trouble?

There have been a number of warnings in the news recently about internships. We thought we would use this article to provide some guidance on the good, the bad, and sometimes ugly aspects of the matter.

Internships continue to be valuable experiences for the interns and the companies that take them on. Businesses can use unpaid internships to determine a potential employee’s performance capabilities. Similarly interns can use the opportunity to evaluate their interest in the organization before committing to a full time position. Also, considering the unemployment rate, an unpaid internship is often the only opportunity available to students in between semesters or graduates out of work. Despite these advantages there is a right and a wrong way to bring temporary workers into the office.

The hiring of interns should follow the same formalities as hiring any other person into the company. There should be no shortcuts for interns. If background searches are routinely conducted for all other positions, then run one on the intern as well. If the intern will be paid, then the normal payroll and tax paperwork should be completed. If all other employees have signed a confidentiality agreement, then the interns should do the same. Potential interns should be screened and go through an interview process, especially if you are bringing in a family friend or a relative. The wrong intern, just like the wrong employee, can do as much harm as good to a company. Horror stories abound of interns disclosing client information on social media or walking off with valuable company equipment. Make sure you know why an intern wants to work for your company and confirm that the intern is able to support herself or himself if working for free.

Take the time to explain to interns up front the office rules, policies and expectations. An intern, like every employee, also needs to understand a company’s privacy policies if using the company’s computer sys-tems, and the company’s confidentiality policies if they will have access to personal client information.

Before hiring an intern, consider whether an intern (or her family) might have a conflict of interest with your business or your clients or be inclined to share valuable company data. At a minimum, interns should understand that company business should not be the topic of discussion at their next family dinner or happy hour with their friends.

The Department of Labor has set limitations on what an intern may do if she is not compensated for her time. The general rule is that businesses cannot derive benefit from the work performed by an unpaid employee. Essentially, unpaid interns may not do anything that would contribute to the company’s operations. Interns may be mentored and may perform tasks that are not critical or necessary to business operations.

Although these limitations may seem to take away the benefit of having an intern, an unpaid intern can still be good for businesses in the long run. Transitioning and training new employees is a big expense for most businesses; having the time to evaluate and train a potential employee without the associated cost or a recruiter’s fee is a big advantage that should not be overlooked.

The Small Business Administration (“SBA”) website (www.sba.gov) provides some helpful guidance on unpaid internships:
1. The training, even though it includes actual operation of the facilities of the employer, must be similar to that which would be given in a vocational school;
2. The training is for the benefit of the trainee;
3. The trainees do not displace regular employees, but work under close observation;
4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
5. The trainees are not necessarily entitled to a job at the completion of the training period; and
6. The employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.

Businesses should also remember that whether an intern is paid or not, all federal and state laws and regulations apply to the presence of that intern on the company’s premises, including child labor laws, workplace safety regulations, employment discrimination, and sexual harassment. So, hire those interns but with all the precautions and steps that are taken with other employees.


[Business Insights is hosted by the Law Firm of Kumar, Prabhu, Patel & Banerjee, LLC.  
Sonjui L. Kumar is a corporate, transactional attorney and a founding partner of KPPB Law.
Belinda Be is a third year law student at Georgia State University College of Law and is a paid clerk for KPPB Law.

Disclaimer: This article is for general information purposes only, and does not constitute legal, tax, or other professional advice.]



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