Last week I asked the question, “Should I hire an intern?” I hope you’ve had time to think about the answer. You need to have the time and patience to teach someone the tricks of your trade, plus have enough work for your intern to do during his or her internship. In exchange for that real world experience, your company has an eager new helper.
So if you answered yes and are ready to hire an intern, now it’s time to talk about how to hire an intern. There are many legal and financial questions to answer and paperwork to fill out when creating an internship. Here are some things to consider:
EMPLOYMENT CLASSIFICATION
All internships are not created equal. One of the things to consider when hiring an intern is how you will classify his or her employment. There are three ways: 1) Employee, 2) Independent Contractor or 3) Volunteer. Will your intern be paid or unpaid?
TAX FORMS
If you classify an intern as an employee, then you must pay them in exchange for doing a specific job. Employees who receive a wage, must receive a W-2 tax form and the employer has to pay federal and state payroll taxes for the employee. These taxes include: Social Security, Medicare and unemployment taxes.
WAGE MINIMUM
If you decide to pay an intern and they are classified as employees, then you must pay them at least the minimum wage. If your small business can’t afford to pay an intern, then he or she must legally be classified as a volunteer. It’s legal to hire an unpaid intern, but it’s best to do it when an intern is getting academic credits at a university in exchange for the internship. There’s actually a seven factor test to assess if an intern is a volunteer. Call us or click here for more information about that. If you’re unsure about how to classify a worker, you can submit Form SS-8 to the IRS and provide details about your internship program.
EXPENSE REIMBURSEMENT
If your intern drives his or her own vehicle to meet you at an outside location, could you or should you reimburse the intern for mileage and other added expenses? The answer is that you aren’t legally required to do so, but it would be a nice gesture.
WORKERS’ COMPENSATION
If your intern is a volunteer, and he or she falls or has an accident or injury on the job, your workers’ compensation insurance won’t cover it. You may want to let your intern know or include this information in any initial paperwork. In the past, former interns have filed complaints with the Department of Labor or have even tried to file claims for unemployment benefits or worker’s compensation if injured on the job.
It’s important to talk to your bookkeeper, accountant or employment attorney to discuss creating an internship. If you mistakenly categorize an intern, it could cost your small business time and money. Call one of our team members for more information or consult an employment lawyer.
I hope this blog series has been helpful. Hopefully, you’ll be able to shape a young person’s life and have a positive impact on his or her future.
