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What's the Difference Between an Intern and an Employee?

Posted by Jenny Swinerton on May 23, 2013

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Interns vs EmployeesThe desire to help up-and-coming professionals often creates an interest in developing internship programs. However, there is a lot of misinformation about internships in the marketplace. 

Companies Train Interns and Hire Employees

In other words, be clear about the outcomes you expect from your internship program. There are six criteria from the U.S. Department of Labor to help guide the analysis of whether the intern must be paid:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment; 

  2. The internship experience is for the benefit of the intern; 

  3. The intern does not displace regular employees, but works under close supervision of existing staff; 

  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded; 

  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and 

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

If you determine that you do in fact want to create an internship program, here are some pointers:

  • The outcome of an internship program should be solely based on training of the intern according to a pre-defined curriculum. 

  • If you want to hire an individual to temporarily perform a specific job function within your organization, then that individual should be considered an employee, not an intern. As such, all employment related rules apply. And, as an employee, that individual cannot agree to waive their rights, especially not in writing.

  • If you have an unpaid intern temporarily working within your company to perform a specific job or role, this “unpaid internship” role poses a long term liability exposure for your business, creating issues with wage and hour regulations, workers’ compensation, welfare benefit and employment tax withholding.

There are limited circumstances when an intern is unpaid. However, if your situation meets the criteria below, the individual could be considered unpaid and not an “employee” per se.

How Does an Unpaid Internship Program Work?

It involves training an individual based on a curriculum you establish.

  • A company provides training to an intern similar to that which would be provided in a vocational school, even though it includes actual operation of the facilities of the employer. In other words, every internship program needs to be based upon a curriculum. 

  • Company provided training is for the benefit of the intern, not the business.

  • Interns do not displace regular employees, but rather work under close supervision. In other words, interns do not perform a job function which could be identified as a job function of a staff position.

  • The company providing the training derives no immediate advantage from the activities of the intern, and on occasion, the company’s operations may actually be impeded. In other words, interns do not produce work product or otherwise contribute to the outcome of the service or product produced by the company.

  • The intern is not necessarily entitled to a job at the completion of the internship program; and 

  • The company and the intern understand that the interns are not entitled to wages for the time spent in training.

At a time when so many companies are streamlining work processes and maintaining lean teams, it is challenging for any business to meet the criteria established for “unpaid internship” programs.

A Suggested Approach for How a Paid Internship Program Could Work

It involves hiring an individual for a designated period of time.

  • The company agrees to hire an individual for a definitive period of time, clearly identified with a starting and ending date.

  • The company pays the individual minimum wage (or more).

  • The company creates a structured program that benefits both the intern and the company, including hands-on work and specific vocational training.

  • The company makes no commitment to hire interns that complete the internship program.

For more information . . . 

Download a Checklist  for Classifying Employees



Jenny Swinerton at SequentAbout the Author   

Jenny Swinerton is General Counsel for Sequent.

 




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Topics: Compliance, Human Resources


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