Make sure you don’t break the rules and regulations when it comes to interns.
The line between intern and employee can sometimes be unclear. That is why it is important to understand the rules so you don’t end up crossing over that line where the intern is acting as a dedicated employee.
Intern versus Employee
The primary purpose of an internship is for the candidate to gain a greater understanding of the industry and increase their work experience. Therefore, an intern should be treated accordingly – as a ‘student’ learning about the company, not treated as an employee.
A court may classify an intern as an employee if:
- The organisation benefits more from the candidate’s contribution than the candidate gains from the organisation
- The candidate’s work is ordinarily completed by employees
- The organisation expects the candidate’s contribution to be productive and/or
- The work completed by the candidate is essential to the organisation’s operations
This isn’t just a labelling issue. Unlike interns, employees must receive at least the minimum wage. They also have a lot of other rights and protections an intern doesn’t.
Length of Internships
Internships vary in length. They can include a contiguous period – for example, four consecutive business weeks – or individual days over an extended period – for example, every Wednesday for 20 weeks. There are no restrictions on the length of an internship. However, the longer an internship runs, the more likely the candidate is to be considered an employee.
Interns should not be doing the kind of vital activities that employees usually perform. An intern at a magazine, for example, should not be expected to file a story to a deadline. That is, the magazine should be able to go to press without the intern’s contribution.
In many cases, the internship will be largely observational, or comprise basic activities that assist in furthering an insight into what’s involved in working in a particular industry or for a particular business.
If you offer payment to your intern below the minimum wage, the internship activities are subject to the same rules as an unpaid internship. That means the intern must attain more benefits than the business from their activities and should not be subject to the same expectations as an employee.
Better to Do It the Right Way
As a business owner, you can choose to offer internships for a range of legally sound, even admirable reasons. You might want to put back into an industry you love. You may want to enjoy the thrill of mentoring someone brimming over with youthful enthusiasm. Quite often, you will be trialling people before offering them an entry-level job.
As long as you are offering some sort of win-win arrangement, the chances of a disgruntled intern taking legal action are minimal. But if you are seeking to take advantage of young or desperate people, be aware their ‘free’ labour may end up costing you a great deal.
Does an internship program make sense for your small business? Read about the key factors to consider when hiring interns.
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.