Hiring interns has a number of benefits: They bring fresh ideas to the table, spread word of your business to their peers, increase your productivity, and often turn into ideal full-time hires later on down the road.
But, there’s a major consideration before you bring them on: Do you have to pay them?
After all, maybe you’re on a tight budget—or maybe you know other companies in your area or industry that don’t pay their interns. If those businesses are able to attract interns for no pay, why should you shell out a salary?
If you take the question to Google, you’ll be faced with hundreds of results—many of them opinions peppered with phrases like “slave labor” or “don’t be cheap.” But on the other hand, you might come across profiles of potential interns who are begging for experience and wouldn’t hesitate to work for free.
The mix of information can be a little overwhelming, huh?
After talking with two experts on internships, it’s been confirmed: Deciding whether or not to pay interns isn’t an easy task. There are moral, legal, and ethical questions surrounding the dilemma—and ultimately, in spite of all the arguments, you have to decide what’s best for your business. If you’re facing this decision, you have a lot to think about, but here are the basics.
What the Law Says
With escalating arguments on both sides of the issue, recent lawsuits have drawn attention to the usually unenforced Federal Labor Standards Act (FSLA), which dictates if and when an intern needs to be financially compensated.
The FSLA specifies six criteria to determine whether someone is a “trainee” or an employee—the difference being that employees need to be paid at least minimum wage (even if you plan to offer college credit).
The criteria are up for interpretation, but it boils down to this: If you can’t or don’t want to pay your interns, you have to provide skills and opportunities that clearly benefit them, and you can’t gain anything from their work. Lauren Berger, CEO of InternQueen.com and author of All Work, No Pay puts it this way: “If the intern is contributing to your revenue, he or she needs to be paid.” So, under the law, anything beyond a generous, selfless, educational, mentor-mentee relationship requires financial compensation. (Volunteers at nonprofits are the only exception.)
If the rules are that straightforward, why do so many unpaid internships require nothing more than ordering coffee and running personal errands? According to Mark Babbitt, founder and CEO of YouTern, “It’s a complaint-driven system that is unenforceable and has few consequences.” The law is also long overdue for an upgrade—but lawmakers are reluctant to revise it, because they, too, rely on unpaid interns.
But that may be changing—recently, those complaints are being voiced a little louder. Even if an intern initially agrees to work without compensation, you’re not in the safe zone—if you or your company benefits from his or her work in the end, he or she has grounds to sue. And that’s exactly what a few ex-interns are doing: Alex Footman and Eric Glatt are now famous for suing the producers of Black Swan, Xuedan Wang is suing Harper’s Bazaar, and Lucy Bickerton successfully sued Charlie Rose and won a $250,000 settlement.
Paid Interns Are Happy Interns
Aside from avoiding a lawsuit, there are other significant benefits to paying your interns. Babbitt notes that paid interns are happy interns—and happy interns are excited to come to work, contribute to the team, and put forth their best efforts. (And as you see this work ethic emerge, you may even find your next full-time hire!)
Happy interns also say nice things about your company. With such enthusiasm for your business, these “brand ambassadors” can sell your culture to their friends—a.k.a. your potential future hires—ultimately saving you in recruitment and headhunting costs.
And by paying them, you’ll gain interns with greater flexibility because you won’t be limited to students who can only work a sparse five hours per week in between their paid part-time jobs. That means: They’ll have more time to work for you—and that’s why you hired them in the first place.
If You Can’t Pay, Make it Mutually Beneficial
On the other hand, it’s easy to see why some employers prefer to hire unpaid interns. For one, you can obviously save a lot of cash. Plus, by freeing up resources, you can provide internships to a greater number of candidates. And since those interns obviously aren’t just looking for a paycheck (they did agree to be unpaid, after all), they’re more likely to be truly dedicated to your cause and eager to learn the skills you can provide.
On that note, remember that in exchange for working for free, these unpaid interns expect to actually learn. According to Babbitt, “There’s no such thing as an entry-level position; no one has the patience to mentor anymore.” With that in mind, these interns want to be able to get ahead of the learning curve before they enter the workforce—and they’ll sacrifice a paycheck for that opportunity.
So, you have to give significant thought to the skills and experience you’re providing. If you simply use unpaid interns for coffee runs and personal tasks, you aren’t truly teaching them about your industry (not to mention you’re not meeting legal requirements). For example, according to Babbitt, “The fashion industry is notorious for not paying and grinding interns to nothing.” At the end of their internships, fashion hopefuls have fetched a lot of coffee, but haven’t gained any new skills—and aren’t any more desirable to you or to other potential employers.
If you can’t give them a paycheck, clearly communicate to your interns how they’ll benefit (e.g., at the completion of the internship, they’ll be social media masters, experts in Excel pivot tables, or they’ll have made new and exciting connections). Then, make sure that happens. The relationship needs to be mutually beneficial, and you want your interns to leave proud of their work and equipped to move into the (paying) workforce.
If you’re thinking about bringing on interns this year, educate yourself on the law and industry norms so you have all the information you need to make a smart decision. Ultimately, clearly communicating expectations for both you and your intern will make this as simple as possible. But to make it even simpler: Don’t exploit your interns, make the relationship mutually beneficial, and pay if you can.