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Confused about Payroll for Unpaid Interns?

In a previous blog post, we spoke about whether or not employing student interns could be right for your business. The same can be said for all internships where businesses provide the opportunity for individuals to learn about a particular industry. Internships provide aspiring people that want to know more about a job the chance to learn first-hand about what it takes to become successful.

With many businesses taking in interns, the question of having to pay for an intern’s service begins to come into play. Businesses must follow the U.S. Department of Labor’s criteria to determine whether or not an individual qualifies for unpaid internship status.

  • The internship must be conducted in an educational environment. The internship can also be carried out within the specific location where the business takes place.
  • Experience that the internship will bring to the intern purely benefits them.
  • The intern’s position does not take the job of a regular employee. They may only work under close supervision of the already existing staff.
  • Whoever is training the intern will receive no immediate advantage from the intern’s activities.
  • At the conclusion of the internship, the intern is not necessarily entitled to a job with the company.
  • The employer and the intern both understand that the time spent in the internship does not entitle the intern to a wage.

The U.S Department of Labor makes it fairly clear what the qualifications of an unpaid intern are, but businesses still find themselves in a grey area when trying to abide by all of the accompanying criteria. Oftentimes, employers will use interns like unpaid assistants, and make them do menial chores. This violates the criteria since the employer has taken advantage of the intern as well as eliminating the job of an otherwise skilled worker. Essentially, the only thing the intern should be doing is observing and learning.

Even if an intern agrees to an unpaid internship and finds that they are being asked to do work, they can demand to be paid and can even file a claim to the U.S Department of Labor. Remember, if the business benefits from the work more than the intern, they will be considered an employee and should be paid.

Padgett Payroll Services® has been in the small business industry for more than 40 years. While unpaid internships can be helpful to your business by providing training for your community as well as strengthening your brand, you must make sure you take all the precautions necessary. If you want to learn more about our employee payroll services, please contact us today.

Do you have the support you need to manage your small business bookkeeping? Contact us to schedule an appointment to speak with a local small business advisor.

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