This time I would like to bring to the attention of business owners an important distinction between interns and employees. Since interns are not paid, it may appear tempting for young businesses to classify certain people involved in their business operations as interns rather than employees, thus avoiding employment-related taxes and fulfillment of the minimum wage requirements. I am listing below the six criteria developed by the Department of Labor that should help identify interns and help avoid businesses a costly mistake of misclassification of their employees.
All of these criteria need to be met in order to qualify students (including individuals participating in school-to-work programs, internships, transition, vocational education, work experience, etc.) as interns instead of employees.
1. The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school (the student is under continued and direct supervision by employees of the business).
2. The training is of the benefit of the trainees or students. Such placements are not made to meet the labor needs of the business.
3. The trainees or students do not displace regular employees, employees have not been relieved of assigned duties, and the students are not performing services that, although not ordinarily performed by employees, clearly are of benefit to the business.
4. The employer that provides the training derives no immediate advantages from the activities of the trainees or students, and on occasion, operations may actually be impeded.
5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period.
6. The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.
If all six criteria are met, the worker is an intern, gaining valuable hands-on experience. However, in practice, some of these criteria are hard to meet (for example, #4 above may be difficult to satisfy once the results of on-the-job training start to materialize). The Department of Labor has confirmed that in these difficult economic times their particular focus is on preventing employers from taking advantage of the unemployed, who are often willing to work for free just to get "a foot in the door". Therefore, extreme caution should be exercised when hiring interns or other unpaid personnel.