As we covered before, many companies are treating freelancers illegally, by managing them the same as they would an employee. Today we are going to cover interns, and we'll bottom line it for you: you probably shouldn't have any. As it is with freelancers, interns should not be treated the same as an employee; if they act like an employee, then they should be an employee and not an intern.

As a general rule, the nature of an internship is simply educational, sort of like a type of work/study program. The concept is that an internship will teach interns valuable employable skills. That being said, if your intern is doing the work of or the same work as an employee, they're no longer an intern; they're an unpaid employee, and that's illegal.

Roughly half of all college students participate in some sort of internship, and half of those internships are unpaid.

According to the Labor Department, here are considerations in regards to interns. Every single one of these is required in order for it to be a legal unpaid intern:

1. Both the intern and the boss understand that it is an unpaid position. If any compensation occurs, it could open the company up to ramifications.

2. The intern cannot replace the work of or fill the position of an employee.

3. It should be similar to what the intern would learn in an educational environment, such as a school or university.

4. The internship experience should benefit the intern more than the company.

5. The intern should not be doing it only because there is a promise of a job at the end.

6. The employer cannot benefit from the work the intern is doing.

7. The employer and the intern must both be aware of the length of time the internship will last, setting a definite end date, either a specific date (such as October 3rd of this year) or 60 days from the day the intern starts.

Here are the words of Judge William Pauley regarding a set of interns at a major company, "They worked as paid employees work, providing an immediate advantage to their employer and performing low-level tasks not requiring specialized training. The benefits they may have received — such as knowledge of how a production or accounting office functions or references for future jobs — are the results of simply having worked as any other employee works, not of internships designed to be uniquely educational to the interns and of little utility to the employer. They received nothing approximating the education they would receive in an academic setting or vocational school."

Generally speaking, unpaid internships are not legal and should be avoided. Generally speaking, internships exist only to benefit the employer; There is almost no benefit to the intern. One study showed that people with an unpaid internship had nearly the same hiring rate as those without -- 39.5% to 38.6%, respectively.

Something else to note is that since unpaid interns are not making any money, they require someone else to support them. This means two people are working for the price of one. Some view this as a form of discrimination, as the unpaid internship and the requirement of being supported prevents those from lower-income families from applying to the internship, since they cannot afford to intern. Another way it could be misunderstood as discrimination is if the person is African-American, the comparison could be made to slaves.

How can you protect yourself legally? One way is if the intern is in college or attending a university, that institution can oversee the internship. Academic credit could be earned. It is especially acceptable if the intern is learning about tasks pertaining to their degree.

Another way is to have one designated employee as a mentor that oversees the intern, and whom the intern can follow or "job shadow."

Obviously, Prime Financial Recruiting is not comprised of lawyers, nor do we employ anyone with a law degree. When it doubt, we always suggest you consult a lawyer. If you have an intern who may not be as legal as you originally thought, again, reach out to a lawyer and rectify the situation promptly.

Prime Financial Recruiting offers services to the secured lending industry, including factoring, asset-based lending, and purchase order finance.

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