Does Your LLC Need an Internship Program?

Does Your LLC Need an Internship Program?

As your small business grows, you will need to hire the right people for the right jobs — and one of the best ways to find new talent to work for your company is by starting an internship program.

There are many benefits of internships for employers, such as finding new talent, hiring up-and-coming employees, getting more work done at a lower cost, and helping talented people to get real-world work experience while they are still completing their degrees or professional training. Having an internship program can be especially beneficial for small businesses because it gives you more flexibility in hiring and staffing; you can often use an internship program to get certain jobs done within your organization in a way that is more productive and efficient than hiring full-time employees with all of the costs and overhead that goes into that.

However, before you start hiring interns, make sure your internship program is in compliance with the various internship requirements of state and federal labor laws.

Here are a few things to keep in mind to have a legal and successful internship program at your LLC:

Your Interns Should (Usually) Be Paid

It might sound like a great deal to a small business to be able to have an unpaid internship program where interns work for your business for free — but beware! There are federal labor laws and guidelines that allow internships to be unpaid, and others which require interns to be paid and treated like employees or independent contractors. Under the Fair Labor Standards Act (FLSA), it is generally more common for nonprofit organizations or government agencies to offer unpaid internship programs, while interns and students working for “for-profit” employers are generally entitled to be paid at least minimum wage and to receive overtime pay.

However, if you set up your internship program in compliance with new 2018 rules from the Department of Labor, you can have an unpaid internship program at your “for-profit” LLC. According to the Department of Labor, unpaid internships are intended to be an educational and training opportunity that benefits the intern more than the employer. You can have an unpaid internship program if it meets the following factors in the Department of Labor’s “primary beneficiary” test:

  • Both the intern and the employer understand that the intern does not expect to be compensated for the work.
  • The intern will receive training that is similar to what they would receive in an educational environment, such as clinical training or hands-on training received at educational institutions.
  • The unpaid internship is directly related to the intern’s education program, such as by being part of coursework or by receiving academic credit for the internship.
  • The internship corresponds to the academic calendar.
  • The internship is limited in duration to a time period when the intern is receiving beneficial learning.
  • The intern’s work provides significant educational benefits to the intern and complements, rather than displaces, the work of paid employees.
  • The intern and the employer understand that the intern is not entitled to a paid job at the end of the internship.

If your internship program can meet this test, then you can legally have an unpaid internship program — but you need to make sure that you are definitely delivering an educational and training experience for your unpaid interns, not just having them “work for free.” If your unpaid internship program does not meet this test, that is a sign that your interns should be classified as employees and paid accordingly. And if you do not pay your interns fairly, you run the risk of being penalized by the Department of Labor or other state and local regulatory officials.

When in doubt? Pay your interns!

Give Your Interns a Detailed Job Description and Specific Project Goals

Whether you’re paying your interns in educational experience or cash, you should make sure to give your them a detailed job description. Knowing upfront what is expected of them will help your interns be productive and feel better about their work. Set specific performance goals and an ambitious list of projects; if possible, let the interns choose which projects are most interesting to them.

To start creating your project list, think through these questions:

  • What do you want your interns to accomplish during their time at your company?
  • Which projects do you want them to contribute to?
  • What will they learn during their internship?
  • How will this internship program leave the interns (and the company) better off than when you started?

Conduct Regular Performance Reviews

Many employees tend to think of performance reviews as being an annual quiet conversation behind closed doors with their boss. But this doesn’t have to be the case, especially for your internship program. Set up a few milestones along the way during the duration of the internship, such as monthly or even weekly review conversations. This will give you a chance to talk with your interns along the way to make sure the internship is on the right track.

Think about setting up your reviews to answer at least these questions:

  • Is the intern making progress toward their project milestones?
  • How do they feel about the experience so far?
  • What adjustments might be needed to help everyone get more out of the internship?

Offer Opportunities for Mentoring, Networking, and Professional Development

Ideally, your internship program should help your interns get better at what they do as professionals, in ways that go beyond the immediate job description. Be generous about connecting your interns with opportunities for mentoring, networking events, and other professional development activities. Especially if you are working with interns who are experiencing their first workplace environment outside of college or high school, you have a great chance to give them a positive impression of what it means to have a successful career.

So go big: Give your interns a chance to meet other interns, find professional mentors, attend lunch and learns and professional development seminars, volunteer for community service organizations and more! All of the things that make the world of work so rewarding can also be implemented as part of your internship program.

Having an internship program, if done correctly, is much more than “cheap labor” for your company – it’s an opportunity to give some emerging professionals a great introduction to your company, your industry, and your career field. It takes hard work to organize a great internship program – you will need to think carefully about how to construct a program and identify projects that are a good fit for your interns to be successful. But with careful planning and ongoing communication, your internship program can help your company succeed while also giving some talented people a chance to supercharge their careers.

Are you ready to start a business, form an LLC, or reorganize your current business structure with business incorporation services? Talk to Incfile today! Our incorporation experts can help you evaluate your options with state-specific advice.

Ben Gran

Ben Gran is a freelance writer from Des Moines, Iowa. Ben has written for Fortune 500 companies, the Governor of Iowa (who now serves as U.S. Secretary of Agriculture), the U.S. Secretary of the Navy, and many corporate clients. He writes about entrepreneurship, technology, food and other areas of great personal interest.

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