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Should my Start-Up Business Use Interns?

Interns picHopefully you have read our blog titled “Start-Up Businesses, Employees & Independent Contractors” for information regarding your company’s first hires. Another consideration for obtaining help with your business that you may want to explore is using interns. However, it is important to understand that you can no longer “pay” your interns with pizza, beer and “the experience” they get from working with you. In fact, unpaid internships are now strictly scrutinized by both federal and state labor departments.

To avoid being penalized for unpaid wages , your company should pay its interns at least minimum wage, with college credit for the internship, and/or follow a strict training program. However, if you decide to use unpaid interns, you should follow the six-prong test published by the Department of Labor to help ensure you comply with the law:

  1. The internship 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 your company’s relationship with an intern meets ALL of the above criteria, an employment relationship does not exist under federal law. In other words, the minimum wage and overtime provisions are not applicable to your interns. However, you should still confer with a local employment law attorney to understand what your state law requirements are and if you are in compliance with them.

The Swenson Law Firm is located in Sacramento County and we proudly serve businesses of all sizes from all over the State of California. Contact us today to learn more about how we can assist you with matters such as trademarks, defending lawsuits, business formation, contract negotiations, hiring employees, and protecting your intellectual property. With our years of complex business trial and litigation experience, we are an effective, efficient and affordable choice in representing you at the bargaining table and in the courtroom.

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