What HR Needs to Know About Internship Programs

Many professionals may have fond memories of their internships—learning the industry and building their network at a time in their career when those experiences are most formative. But bad experiences have also turned many aspirants away from a particular field. 

After all, internships are investments, not quick fixes. For employers, an internship program can be a successful long-term hiring strategy, but it could backfire as a short-term staffing solution. To be clear, internships can be mutually beneficial for the intern and the employer, but they must be done the right way.

Here’s how to develop an effective internship program at your organization, including what compliance issues to consider.

Pros and Cons of Starting an Internship Program

Before we dive into how to develop an internship program, let’s consider why you should—or maybe shouldn’t—consider starting one, depending on your organization’s needs.

Benefits of an Internship Program:

First, let’s consider the positives, especially in relation to your long-term hiring strategy. 

• • • Improves Your Hiring Pipeline

      An effective program should nurture inexperienced but hardworking interns and develop them into responsible and talented professionals. An effective program should also attract other career-seekers with potential. That means an internship program can become an important part of your hiring pipeline.

      Similarly, an effective program can shorten your time to hire since the interns you’ve been developing have already been vetted and integrated into your company culture.

    • Establishes a Cohort of Support

      It could also lead to a cohort of new hires. Since many programs coordinate with university calendars, a group of interns typically complete the program around the same time. 

      If you determine that several in the group would be the best candidates for open positions, they could form a supportive and collaborative cohort within your organization.

    • Helps Your Organization Invest in University Relationships

      Having an internship also helps your organization invest in relationships with universities, which could become another part of a successful long-term hiring strategy. 

      Strengthening these relationships can also give you some positive brand exposure.

    • Lowers Labor Costs

      While many employers may worry about the cost, interns can provide relatively inexpensive labor since you usually don’t have to provide benefits. To be clear, though, for-profit employers are usually required to pay interns at least the minimum wage to comply with federal and state law. But more on that later. 

      Similarly, hiring interns can help contain costs since the temporary nature of the arrangement usually makes them less risky to employ.

    • Helps Aspiring Professionals

      Ultimately, however, the best reason to start an internship program is to help aspiring, early professionals who need a boost at the beginning of their careers. Interns can gain valuable experience while building their network.

      Because internships immerse individuals in an industry, they can also help career-seekers rule out a bad fit early on and avoid time-wasting “false starts.” And of course, interns have a competitive advantage over other candidates seeking a position in a particular company or industry.

Costs of an Internship Program:

By now, you may be wondering why every small business doesn’t hire interns. Well, there are a few cons to consider.

• • • Still Costs Time and Resources in Onboarding

      Even though an internship program can be a cost-effective and relatively low-risk hiring strategy, it still costs time and resources to onboard any new employee, and remember, interns are often short-term. So, employers are spending a similar amount of time and resources onboarding a temporary intern as a permanent employee.

    • Requires You to Pay Wages (In Most Circumstances)

      As mentioned before, most interns at for-profit organizations qualify as employees, which means they should be paid. So, you’ll need to consider that cost as well. Again, we’ll cover that in more depth in a moment.

    • Involves Time and Commitment to Training and Performance Management

      It’s also important to remember that internships are essentially training programs. They require the careful attention of HR and direct supervisors, and the necessary recordkeeping and performance management are time-consuming.

    • May Lead to Unearned Time-Off Requests

      Finally, if you’ve never had experience with an internship program before, it’s easy to forget that most interns are college students and most internships are planned around semesters or summers. In other words, you’re likely to be bombarded with time-off requests from temporary employees who may feel entitled to breaks without having earned them.

That’s just one of the many reasons it’s important to set expectations early and clearly when developing your internship program.

HR’s Role in Developing Your Internship Program

HR’s role in developing and maintaining an internship program will look different from one organization to the next. But for the most part, HR can take ownership of your program in the following five ways:

• Get Buy-In from Leadership
  It’s crucial to get not only leadership’s approval, but also their buy-in—especially if you’re trying to start an internship program at an organization that has never had one. Focus on the pros mentioned above—and address the cons as well—demonstrating that you’ve thought through the benefits, the costs, and the details. 
  Leadership’s support can help get reluctant managers and other employees on board with the program, too.
• Structure the Program and Set Expectations
  HR should write a policy that clearly outlines the process and sets expectations for both interns and supervisors. Explain how managers may request interns, how interns will be onboarded, how interns and supervisors will check in with each other and with HR, and how interns will be offboarded. 
  It’s also important to clarify which company policies apply to interns—such as data privacy and anti-harassment protections—and which do not—such as PTO.
• Balance the Interests of Your Organization and Your Interns
  Since HR is best positioned to oversee how the program is working, you should also take care to balance the interests of your organization and your interns. For example, giving an intern a lot of responsibility may seem like an easy way to give them a lot of experience while helping the employer increase productivity. 
  But burning out an intern by overwhelming them with responsibility will likely only hurt both parties and undermine your efforts. Remember, this is meant to be a learning experience.
• Coordinate Onboarding and Offboarding with Supervisors
  HR should structure the onboarding and offboarding processes more generally and coordinate with particular supervisors on how to implement them in a way that best fits the department and the position. 
  Make sure that onboarding includes introductions to the organization and the team the intern will be working with. Also, make sure that offboarding includes a debriefing and, if necessary, a progress report to the participating university.
• Conduct Regular Check-Ins and Update Policy as Needed
  You shouldn’t limit check-ins to onboarding and offboarding. Instead, establish a regular, recurring schedule of informal check-ins along with any documented progress reports required by your organization or the participating university. 
  Of course, you should use this feedback to update your policy as needed. But you may also find that interns can provide valuable insight into the daily operations of your organization. Interns have different incentives, which can give you different perspectives from full-time employees.

While employers have a lot of discretion over how they structure and implement their internship programs, there are a few important compliance considerations to keep in mind.

Legal Considerations of an Internship Program

Most interns at for-profit organizations are required by law to be paid as employees. Nonprofit and public sector employers usually have much more flexibility about whether or not to pay interns.

The Fair Labor Standards Act (FLSA) governs several areas of employment law, including wages and overtime. The FLSA does not recognize the term “intern”—which means that, for federal compliance purposes, interns must be classified as volunteers, trainees, or employees. 

It’s hard for private businesses to make the case for classifying interns as “volunteers,” so in order to legally avoid paying interns, a for-profit organization must make the case for classifying interns as “trainees.”

The Department of Labor notes that courts have typically used a seven-factor “primary beneficiary” test to determine whether or not a private employer must pay interns. Courts have taken the following factors into consideration:

• The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.

• The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.

• The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.

• The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.

• The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.

• The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
• The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Since the primary beneficiary test is applied on a case-by-case basis, private employers usually choose to simply pay interns at least the minimum wage rather than risk noncompliance.

The FLSA also regulates overtime, and interns who qualify as employees must be eligible for overtime under the law. Similarly, federal child labor laws apply to employees under the age of 18, including interns.

Speaking of age, employers face potential legal issues at the other end of the spectrum as well. While most interns are relatively young and starting their first careers, employers should be careful not to discriminate against older workers seeking internships—whether they have been laid off, are seeking a career change, or want to reenter the workforce after retirement.

Employers must also comply with immigration laws in their state and the US, being especially careful to honor the requirements of each intern’s particular visa.

For the protection of the employer and the intern, both must comply with the relevant areas of company policy as well. As mentioned earlier, HR should clearly outline which company policies apply to interns and which do not.

But overall, internships can be mutually beneficial relationships that pay off long term. An effective internship program can improve your organization’s hiring pipeline and set an intern up for success throughout their career—but only when HR takes care to do it right!

Additional Resources

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