Hiring unpaid interns is a great idea, but it can be a legal minefield: There are more than a few obvious reasons why a startup might want to hire an unpaid intern but it can be a confusing web of laws and requirements. The Department of Labor and State Governments can impose hefty legal consequences for not properly classifying interns. How do you know if you can hire an unpaid intern? There are six-factors laid out by Department of Labor to determine whether it is legal for you to hire an unpaid intern. You can find the test here.
Hiring foreign students: Since there are certain laws regarding hiring students with J-1 and H-1 visas. For instance, many universities and colleges will limit the period in which students with Visas can work and the Department of Labor regulates the amount of time per week they can work. Some states have specific requirements that non-profit and for-profit companies must abide by. For instance, New York requires that any student intern that will perform any amount of manual labor (cleaning, filing papers, carrying binders or books, etc.) must be covered under the employer’s workers’ compensation. It is important to understand all Federal, State and Local laws before onboarding interns.
When in doubt, pay them out: The Department of Labor has complex laws that apply to foreign and domestic interns. Because each startup has its own unique needs, you cannot always legally hire an unpaid intern. If you have any reasonable doubt that a potential unpaid intern will not meet all of the six factors laid out in the Department of Labor test, it is always best to hire them as an employee and pay them according to Federal, State and Local laws.