Answers
Jul 13, 2017 - 04:08 PM
No contract. If there are no other employees or founders getting paid then you can't run afoul of the law that says you can't use an unpaid intern to do the work of a paid employee! At least no startup has ever been prosecuted for it to my knowledge.
One other point on the free interns thing is that many students require a NON-PAYING internship for college class credit. Usually the intern will have the college call or email you to confirm that the gig complies with their requirements but frankly I have never been contacted in all the times we've done this.
Usually just provide an official offer letter with job description but requirements vary by school and instructor I'm sure.
One other point on the free interns thing is that many students require a NON-PAYING internship for college class credit. Usually the intern will have the college call or email you to confirm that the gig complies with their requirements but frankly I have never been contacted in all the times we've done this.
Usually just provide an official offer letter with job description but requirements vary by school and instructor I'm sure.
Jul 14, 2017 - 01:01 PM
While I am not a lawyer I did some additional research and here's what I found from the Washington state law employment site:
What is an internship?
An internship is work-related learning for individuals who wish to have hands-on work experience in a certain occupational field.
What determines an employment relationship with trainees or interns?*
As the state and federal definitions of “employ” are basically the same, the Department of Labor & Industries (L&I) looks to the U. S. Department of Labor (USDOL) Fair Labor Standards Act for certain training conditions exempted from the wage and hour laws.Under certain conditions, individuals without an expressed or implied compensation agreement may work for their own advantage on the premises of another and not necessarily be employees.
Whether trainees are employees depends on all the circumstances surrounding their activities on the employer’s premises.If all six of the following criteria are met, the trainees are not considered 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 an educational environment or vocational school.
2. The training is for the benefit of the trainee.
3. The trainees do not displace regular employees, but work under their close supervision.
4. The business that provides the training derives no immediate advantage from the activities of the trainees, and may in fact be impeded.
5. The trainees are not necessarily entitled to a job at the conclusion of the training period.
6. The trainees understand they are not entitled to wages for the time spent in the training
I believe having the founders or other employees not taking a salary satisfies condition 3. Condition 4 is a little in the murky area. If interns are creating content and doing SEO, the business may gain an immediate advantage. Although one could argue that SEO takes months, if not years to pay off and so whatever benefit the business derived would not be immediate.
What is an internship?
An internship is work-related learning for individuals who wish to have hands-on work experience in a certain occupational field.
What determines an employment relationship with trainees or interns?*
As the state and federal definitions of “employ” are basically the same, the Department of Labor & Industries (L&I) looks to the U. S. Department of Labor (USDOL) Fair Labor Standards Act for certain training conditions exempted from the wage and hour laws.Under certain conditions, individuals without an expressed or implied compensation agreement may work for their own advantage on the premises of another and not necessarily be employees.
Whether trainees are employees depends on all the circumstances surrounding their activities on the employer’s premises.If all six of the following criteria are met, the trainees are not considered 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 an educational environment or vocational school.
2. The training is for the benefit of the trainee.
3. The trainees do not displace regular employees, but work under their close supervision.
4. The business that provides the training derives no immediate advantage from the activities of the trainees, and may in fact be impeded.
5. The trainees are not necessarily entitled to a job at the conclusion of the training period.
6. The trainees understand they are not entitled to wages for the time spent in the training
I believe having the founders or other employees not taking a salary satisfies condition 3. Condition 4 is a little in the murky area. If interns are creating content and doing SEO, the business may gain an immediate advantage. Although one could argue that SEO takes months, if not years to pay off and so whatever benefit the business derived would not be immediate.
Jul 15, 2017 - 11:51 AM
I can tell you this topic is not as murky as you believe. There are very very few instances where you can have an unpaid intern unless you are acquiring your interns through a college/university/training program and that individual is acquiring knowledge through the training they receive working for you AND they receive credit in the class/course/program for the internship.
If you Do not hire interns through a college/university/training program, it would be a very very rare circumstance where you could meet the IRS six part text for non paid internships. The IRS has determined that using an intern to carry out activities/work that replaces a paid employee requires payment.
They have also ruled in the past that the utilization of an intern in lieu of hiring a contractor or employee does not meet the test and the intern must be paid. You must be training the individual in order for them to be an intern so if you are a non technical founder, you do not meet the test.
If you/your startup will advantages from the work performed by the intern, you do not meet the test. If the intern is not closely supervised you do not meet the test.
Running afoul of the IRS is not something any business wants to do and particularly could be a nightmare for a startup.
If you Do not hire interns through a college/university/training program, it would be a very very rare circumstance where you could meet the IRS six part text for non paid internships. The IRS has determined that using an intern to carry out activities/work that replaces a paid employee requires payment.
They have also ruled in the past that the utilization of an intern in lieu of hiring a contractor or employee does not meet the test and the intern must be paid. You must be training the individual in order for them to be an intern so if you are a non technical founder, you do not meet the test.
If you/your startup will advantages from the work performed by the intern, you do not meet the test. If the intern is not closely supervised you do not meet the test.
Running afoul of the IRS is not something any business wants to do and particularly could be a nightmare for a startup.
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