Interns vs. Employees: Hire interns for your benefit and theirs

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From a productivity and efficiency standpoint, having students as employees allows you to utilize their skills and time and simultaneously give them valuable, “hands on” experience.

  • Student interns are a wonderful addition to any practice 
  • Students can add enthusiasm and knowledge the practice may not have (best example is in choosing and using technology)  
  • They can accomplish some projects that have been “on the backburner” in your firm
  • Students can be the next generation of planners

Before you bring the next student onboard, make sure you classify the student correctly as an employee or not. It is very easy to get confused with the terms and classifications. There are many “intern” programs at colleges and universities; some are paid and others are unpaid. 

The United States Department of Labor has applied very definite criteria in determining when a student is AN EMPLOYEE. If your interns are “employees,” they are subject to the Fair Labor Standards Act (FLSA) and must be paid at least the minimum wage. Interns may be exempt from the requirements of the FLSA if they can be categorized as “trainees” as defined under the law.

From the Department of Labor website:

Whether trainees or students are employees of an employer under the FLSA will depend upon all of the circumstances surrounding their activities on the premises of the employer. If all of the following criteria apply, the trainees or students are not employees within the meaning of the Act:

  1. The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
  2. The training is for the benefit of the trainees or students;
  3. The trainees or students do not displace regular employees, but work under close supervision;
  4. The employer that provides the training receives no immediate advantage from the activities of the trainees or students and, on occasion, his operations may even be impeded;
  5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and
  6. The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.

If you expect interns to work directly on your operations in moving work forward and the firm is deriving benefit or advantage (e.g. accomplishing business goals, projects, etc.),  then the student would most likely be classified as an employee and earn at least minimum wage. 

Working for academic credit does not necessarily absolve the firm from paying wages. You still have to make sure that student’s work and role meet all of the six criteria above to avoid the classification of employee.

Some more things you want to check on before hiring students as employees:

  • Make sure you check your eligibility requirements for company benefits—health, retirement, time off, etc. Your current eligibility requirements may give more or less benefits to students than you planned.
  • Students could work hours equivalent to full-time and part time employees. 
  • Students should be evaluated and interviewed based on whether they will meet your expectations. That may require completing a background check. This is important especially if students will be viewing and having access to confidential information.

Mary Dunlap, CFP®
Mary Dunlap Consulting
Pottstown, Pa.

One thought on “Interns vs. Employees: Hire interns for your benefit and theirs

  1. We have been using interns in our practice for the last 3 years and have found them to be helpful in a number of areas, especially on assembing our annual business plan and projects that require the use of technology.

    As with any hire, I think one needs to consider objectives–what are you hoping to get out of the experience of having an intern. Our original objective was, and continues to be, giving a young person first hand exposure to the financial planning and advisory business.

    When I was a senior in college, it was during the recession of 1983. There were few good internships available and the one I landed was in state government. While my boss made an effort to guide me, she was overworked and out of the office about half the time. It was a real eye-opener to the inner workings of state government.

    Interns can be a great way to bring some new blood or spirit or expertise into your firm. They require an investment of your time, but can provide you with valuable insights, too. We’ve had interns with a lot of exposure or knowledge of the financial planning industry and others that are great with spreadsheets and not so much with clients. The variations can be wide. However, your commitment is limited because interships typically have an end date. If it doesn’t work out, you can both say goodbye without out the usual complications of a termination.

    We will continue to be interested in interns for their spirit, motivation and sharp business skills.

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