With so much focus on the impending changes to the FLSA overtime rules, it is important not to lose sight of the existing regulations and keep your organization in compliance with other areas of the law that sets the standards for so many areas of employee compensation practices. One area that is (fairly) straightforward per the existing FLSA regulations and is top of mind for many employers as we head towards the summer months is, of course, interns.
In general, ever since the Department of Labor released a definitive set of standards and “test” for paying interns 6 years ago, the era of unpaid college students fetching coffee and sorting files has for all intents and purposes come to a close. While there are still certain exceptions spelled out in the FLSA, it is far more likely than not that if your organization is considering hiring interns, you will need to pay them for their time worked. So if you are still on the fence about whether or not your organization can afford to pay your interns or are unsure whether or not your organization is required to pay your interns, here are 8 reasons that point to why you really should pay your interns this summer.
1. It’s the law.
Unless you fall under one of the few exceptions laid out by the DOL, it is illegal to hire interns and not pay them for their time worked at your organization. In addition to the language in the FLSA, there is a growing (but mixed) body of high profile case law that tends to favor the unpaid interns bringing the suits against their employers.
2. Everyone else is doing it.
It may sound silly, but peer pressure aside, ERC’s own research demonstrates that the vast majority of employers in Northeast Ohio really do pay their interns. According the 2016 Intern & Recent Graduates Pay Rates & Practices report, only 6% of the participating employers do not pay their interns. Most of these employers appear to be in the non-profit sector, one of the 6 exceptions cited by the FLSA.
3. Recruiting top talent.
Whether your internship program is designed to only last a few months, a few years, or as a way to recruit potential new employees into your organization, paying your interns (and competitively at that) is key to recruiting the best of the best. Making decisions about how much pay (or whether to pay) interns should be very much the same as deciding what to pay your new or existing employees—know what the market demands and pay competitively to attract and retain top talent.
4. Invest in your future.
In many cases this may mean making offers of employment to existing or former interns and can be a great way to “try before you buy”. Paying these individuals while they are interning with your organization demonstrates the value that you place on them and that you appreciate what they bring to the table. Down the road, this could make a difference and sway them towards your organization if a particular student receives multiple job offers after graduation.
5. Build your reputation.
If you are like 62% of this year’s Intern & Recent Graduate Survey respondents, your internship program is geared towards a long term goal of developing a talent pipeline. In a close knit region like Northeast Ohio, having a good reputation for treating and paying your interns well can serve you well in terms of the applicant pool that you see year after year. Conversely, with the power of social media, students that may have had negative experiences or feel they haven’t been compensated fairly can quickly inflict damage on the level of talent coming through your doors in the future.
6. Strengthen the region’s economy.
Although there is no shortage of institutions of high education turning out exceptional talent, keeping these college graduates in Northeast Ohio is key to the overall health & continued growth of the local economy. Providing individuals with paid internships while they are still in school can help improve students’ perceptions of the job market in the region and hopefully encourage them to look for work post-graduation in the area—even if it isn’t with your organization specifically.
7. Look at total compensation.
When we talk about paying interns, we aren’t saying you need to pay them six figures. Even if your organization can’t afford to pay much above minimum wage, keep in mind there are other lower cost ways to enhance the total value of your internship program that can help set you apart from the competition. Pay for them to attend trainings, or even better sign them up for an internal training at your organization. Allow/pay for them to attend networking events (internally/externally). Involve them in your rewards & recognition program or create a separate program for your interns—a $25 gas card for a job well done can go far when you’re in college eating ramen noodles every night! A full listing of these “other” types of benefits offered to interns can be found in this year’s Intern & Recent Graduate report.
8. Growing costs of higher education.
With new statistics coming out every year about the exponential increases in the costs of obtaining a college degree, many students can’t afford not to get paid. By paying your interns you are greatly expanding your potential applicant pool to include all students, not just the ones that can afford not to get paid over the summer based on their family or individual financial situation. In addition, you may also be able to get more total hours of work from your interns if they don’t have to leave and go work a second job that is paying them in order to make ends meet.
View the Intern & Recent Graduate Pay Rates & Practices Survey
This survey reports data from Northeast Ohio employers about their internship and recent graduate employment and pay practices.