As a new crop of college graduates attempts to enter the workforce, a recent Human Resources Executive Online article reminds companies to be careful when bringing on interns, particularly unpaid interns.
As we reported last year, the Department of Labor (DOL) and state agencies have been cracking down on illegal unpaid internships. In order for an unpaid internship to be legal, it must meet the DOL’s six criteria for unpaid interns under the Fair Labor Standards Act. In a nutshell, the internship must be designed as a training program that benefits the intern, not the company, in order to legally be unpaid.
If a company’s unpaid internships don’t meet those criteria, they could end up shelling out back pay to their interns. But according to the article, the bigger risk is that a DOL investigation into unpaid internships could lead to more investigations and audits.
Not only that, but companies could be missing out on the best interns if they refuse to pay, according to the article, which states that the ”‘crème de la crème’” of students have plenty of paid internships to choose from.”
A good way to pay interns is to hire them on a contract basis and outsource the employment of those interns to a contracting back-office, such as FoxHire. That way, they can can avoid the risk of not paying their interns without taking on the additional costs (benefits, employer taxes, etc.) and administrative burdens that comes with making them direct-hires.