Isn't having an intern so convenient? Copying, coffee-getting, and taking care of the tasks you don't want to do? Or maybe you already understand the win-win of an internship and want to put in the work to make sure you get the help you need while they develop professional skills that will help them in the long run. That's better, for sure. So, then it's the big question: Do you pay them? If you're not careful with this decision, you can end up in a legal nightmare. But if you are a small start-up that could really use the energetic help of a couple of students over the summer, what are your options?

If you want/need/dream about hiring an intern, the fundamental question to ask is whether the company will be paying the intern. If your answer is “of course we’ll pay them” then you’ll avoid the big risks that can go with unpaid interns. If your answer is, “I can barely pay myself and you think I’m going to pay an intern?” then your best course of action may be to reach out to a local school/college to see what work for credit programs they may have that could suit your needs. Either way, hiring an intern is a commitment and requires some advance planning.

A Paid Intern = Employee


You are committed to hiring an intern and paying her. She is just like any other employee in a legal sense, meaning she must be paid minimum wage and is eligible for overtime if she’s classified as a non-exempt employee. But she’s not like your other employees in other ways. She’s only going to work at the company for a short and specified period of time, she’ll go by the title of “summer intern” (or any other title you want), and you don’t need to offer her all the benefits that you may offer to permanent employees, like 401(k), health insurance, or paid vacation.

Many companies pay their interns to avoid problems down the road. An intern who didn’t get paid can suddenly become resentful at a later date when your company takes off and she’s talked to a lawyer. She could also get into a car accident while on the job and need to claim worker’s compensation. In many states, the risks of hiring unpaid interns are high. Imagine your treasurer and/or CEO being found personally liable to pay triple the back wages to the intern. In such a situation, the hundreds of dollars you would have spent to pay the intern on a weekly basis doesn’t seem so bad.


Unpaid Intern = Academic Tie-in is Key

You are committed to hiring but aren’t in a position to pay her. There are a range of labor laws to navigate if you decide to go this route and the situations where you don’t need to pay an intern varies state by state so proceed with caution. Some states, like Massachusetts and California, are quite strict and the hurdles that have to be overcome, e.g., the company isn’t supposed to derive any immediate advantage from the intern’s work, means that most interns need to be paid. Other states, like New York, may be more relaxed in applying the tests to determine whether an intern can be unpaid. A theme that nevertheless emerges is that work performed by unpaid interns should be integrated with their academic study. So, finding a student that can earn academic credit is ideal. You can also check out a school that has a co-op or vocational program. Requiring an academic tie-in requires some advance planning and coordination with the student and her school. So be prepared for completing paperwork and in many cases, documenting a formal review of the intern.


Interns are People Too


Regardless of whether you pay your intern, exercising best professional practices still applies. Specify the terms of the internship in an offer letter which the intern signs. Be upfront about what you expect from the intern and what the intern should or should not expect from the internship. Don’t be shy about disclosing that the internship won’t lead to a full-time position at the end if indeed this is the case (you could get into trouble if you dangled the “job” carrot in front of your intern but then couldn’t follow through). Keep track of the work that your intern is doing and check in with her. Give her direction and feedback. Be prepared to be asked to write a reference letter for your intern and know what your response will be.

Interns can inject enthusiasm and fresh perspective into your company. They are also a commitment. If you don’t have the time to dig around for an internship tied to academic study, the safest route is to pay your interns. Otherwise, roll up your sleeves, contact your alma mater or local schools, and find an academic program that is aligned with your industry.

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Sample scenarios are for illustrative purposes only.