Summer internships have been a staple in business for years. Paid and unpaid internships are a great way to get summertime help, gain fresh talent, boost productivity and provide a valuable experience for someone who wants to work and learn.
However, if you’re a Texas business owner thinking about taking on an intern this summer, there are a few risks to keep in mind and steps you should take to protect yourself.
Hiring an intern increases your chances of being sued. Lawsuits by interns and former interns are on the rise and have been a game-changer for businesses with internship programs. There’s always the risk of disgruntled interns suing over hours worked, compensation or some other alleged violation of their rights.
Know the laws. Even if you offer an unpaid internship, you must still comply with the Fair Labor Standards Act (FLSA) – although you might qualify for a “trainee” exemption if your program meets certain criteria. The FLSA has a six-point test for hiring unpaid interns:
- The internship must be for the benefit of the intern.
- The internship must provide similar training that would be given in an educational environment.
- The employer should not derive any immediate advantage from the intern.
- The intern must not displace regular employees and should work under close supervision of existing staff.
- The intern is not entitled to a job at the end of the internship.
- The intern understands that he or she is not entitled to monetary compensation.
Be aware of state wage and hour laws, which can vary in terms of what’s considered proper compensation or hours worked. It’s also not uncommon to find conflicting regulations between state and federal law, so know them both. Think about consulting a lawyer and your human resources department to make sure you’re in compliance. And although most lawsuits deal with compensation issues, consider your anti-discrimination and anti-retaliation policies, procedures for handling grievances and other protections you offer your regular employees.
Lack of structure can lead to a disgruntled intern. Interns need structure just like your regular employees do. Don’t just give them busy work. You’ll have a more productive experience if you take time to develop a program with specific activities, training and goals. A structured program also helps you make sure you’re complying with the law. And, your interns will feel they accomplished something positive and be much less likely to have a grievance down the road.
Protect your company with EPLI coverage. A settlement against you could take a serious bite out of your bottom line – and even threaten your personal assets if you don’t have the right insurance coverage. Talk to an insurance professional about protecting yourself with employment practices liability insurance and any other coverage you might need to mitigate employment practices risks.
A summer internship is a great way for you to give back to your community and help a young worker gain valuable work and life experience. To make sure your program is a win-win for both you and your interns, take time to plan ahead for the potential bumps in the road. And when you’re ready to talk about the insurance coverage you’ll need to run a successful internship, trust the risk management experts at Higginbotham.