Unpaid internship: what does the employer have to do?

[Thomas47]

What is the name of your state (only U.S. law)? MD

Hello,

I have an LLC company in MD, I am the sole proprietor of the company, no employees. There is a student that is asking me to do a free internship with me, so he can learn the job while in school.

How does it work for me to make him do this unpaid internship in my company? Is there any legal paper or form that I will need to submit to the government, IRS, or other agencies? Would the student be considered an employee or contractor for the duration of the unpaid internship? At the end of the internship he wants me to write a paper to the school declaring what his performance. Please, let me know what this involves for me.

[cbg]

I looked into this extensively when I had someone begging me to the point of harassment to let him come work for us to "gain experience". (We had reason to believe he was setting us up for industrial espionage, but that's another story.) The bottom line is that unless he is receiving school credit for it, it's virtually impossible to legally have an unpaid intern. You would have to be working THROUGH the school and most likely paying the school (who would then provide him with a stipend) to do it legally. There might be another way to go about it, but it's a complex issue.

It would be far, far simpler to hire him as a minimum wage employee for a limited time, maybe for the course of the semester.

[Betty]

The U.S. Department of Labor (“DOL”) uses the following six-factor test to determine whether such an individual qualifies as an “intern” under the FLSA:

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.

However, some states have their own wage and hour laws with additional factors to consider in determining whether a worker is an “intern,” and thus not entitled to compensation. It is always a good idea to seek legal counsel in your state before making someone an intern w/o pay.

[commentator]

While the "unpaid intern" idea may sound lovely to a small businessperson, there are huge pitfalls, and this is something better avoided unless it is actually set up by a university. What if the intern is injured on the job? What if they turn around and try to sue you for non payment of wages? What if it is, as cbg mentioned, a case where they want to go out in a few months and set up a competing business, having learned all you know about the process? Run, or hire this person, or don't. But don't do this without really doing your homework on it.