Hiring interns: what small business owners need to know

Hiring an intern can be a great way to support the next generation of professionals while bringing fresh ideas to your business. But before you bring someone on as an intern, it's important to understand that federal and state laws — including those in New York and California — place specific requirements on internship programs.

Whether an intern must be paid, what training should be provided, and how the relationship is structured all depend on the facts of the arrangement.

What's the difference between an intern and an employee?

Employees are hired primarily to perform work that benefits the employer.

Internships, by contrast, are intended to provide meaningful educational or professional training that primarily benefits the intern. Simply calling someone an "intern" does not automatically make them one under the law.

Federal law, along with New York and California labor laws, looks beyond job titles to determine whether an individual is actually an employee entitled to wages and other workplace protections.

Can an internship be unpaid?

Sometimes — but only under limited circumstances.

For-profit businesses in both New York and California face strict rules regarding unpaid internships. While the legal standards differ somewhat between the two states, both generally focus on whether the internship is a genuine educational experience and whether the intern — not the employer — is the primary beneficiary of the relationship.

Factors that may be considered include:

• Whether the internship provides meaningful training.
• Whether the intern receives close supervision.
• Whether the intern replaces regular employees.
• Whether the internship is tied to the intern's education or career development.
• Whether there is any expectation of future employment.

If an internship is not properly structured, the intern may legally be considered an employee who must be paid applicable wages and receive other workplace protections.

Should you use an internship agreement?

Yes.

A written internship agreement helps establish expectations and can document the educational purpose of the internship. Although an agreement alone won't determine whether an internship is legally compliant, it is an important part of a well-designed internship program.

Hiring international students

Businesses considering hiring international students should also confirm that the student has appropriate work authorization. Depending on the individual's immigration status, additional requirements may apply before work can begin.

Common mistakes businesses make

Many small businesses unintentionally create legal risk by:

• Assuming all interns can be unpaid.
• Having interns perform the same work as employees.
• Failing to provide meaningful training or supervision.
• Hiring international students without confirming work authorization.
• Skipping a written internship agreement.

Planning ahead can help your business avoid these common pitfalls.

Questions we hear from small business owners

Every internship is different, and the answers often depend on your specific circumstances.

Business owners frequently ask us:

• Can my business legally have an unpaid intern?
• Does offering college credit make an unpaid internship legal?
• How many hours can an intern work?
• Can an intern replace a regular employee?
• Do interns qualify for overtime?
• What paperwork should I have before an internship begins?
• Can I hire an international student as an intern?
• What are the differences between New York and California internship laws?

If you're unsure about the answers, you're not alone — and a volunteer attorney can work through them with you, at no cost.