In case you didn’t know this, your company (and, by many defaults, YOU), could get in some lawsuit trouble if your internship program resembles the ‘Feed Me Seymour’ dynamic of the cult classic movie, Little Shop of Horrors. You being the evil flesh eating plant, and the intern being the ever-pleasing Seymour.
In 2010, the U.S. Department of Labor, Wage and Hour Division, in combination with The Fair Labor Act (FLSA), provided the general public with Fact Sheet #71 (find your copy here: http://www.dol.gov/whd/regs/compliance/whdfs71.pdf).
Essentially, Fact Sheet #71 provides the six criteria Test for Unpaid Interns that you should refer to when creating an internship program for your business. If you meet these requirements, then you may be okay in hiring Unpaid Interns- but if you do not, then you will need to start thinking of compensation benefits for your interns (whether it may be paying them minimum wage or offering school credit).
Again, if the internship is unpaid, then the internship program must qualify as a trainee program. Here are some general guidelines provided by the FLSA that may keep the intern relationship healthy, fair, and above all, LEGAL:
1. The internship is similar to on the job educational training.
2. The internship is for the benefit of the intern.
3. The intern does not displace other employees.
4. Your business does not receive an “immediate advantage” from the intern’s activities!
5. The intern is not entitled to a job with your company after the internship program is completed.
6. All parties (you and the intern) understand that the intern is not entitled to wages or compensation for the internship.
7. The intern must receive some industry-specific training and must be taught skills which the intern could then transfer to other career opportunities.
A failure to follow the internship program criteria is a common mistake made by businesses time and time again. The last thing you want to do is make the Federal Department of Labor a little angry and have your start-ups reputation hit a very uncool wall.
Bottom Line: Paid internships (or internships for school credit) do offer you more leeway, but always be cautious of your intentions when offering interns an opportunity to join your thriving start up!