To Pay or not to Pay Interns?

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It's that time of year again. Time to start thinking about hiring an intern to build your business' talent pipeline or support some special projects. As you start to begin the hiring process for an intern, you may be asking: should you pay or not pay the intern? If you do pay them, you may be wondering what should you pay interns to be competitive?

To Pay or Not to Pay Interns

Back in 2010, the Department of Labor released guidelines for internship programs under the Fair Labor Standards Act as well as a Test for Unpaid Interns. According to these guidelines, unless your intern meets all of these factors, e.g., the internship is mainly educational in nature and doesn't benefit the organization, they should be paid. As a result, we recommend playing it safe and paying your interns since most internships do not comply with all of these criteria. In fact, there have been a few recent cases where former interns have sued their companies over unpaid work.

Beyond legal consequences, however, from a talent attraction perspective, talented interns (especially in technical fields) can be in high demand. Paying them helps make the internship more attractive and eliminates a reason to not select your organization for an internship. With so many students seeking internships and a limited supply of technical talent, it's best to pay.

Plus, if your organization is using interns to grow a talent pipeline and has plans to hire the intern as a full-time employee following their internship, it's always a good idea to pay them. It shows that you are willing to make an investment in your intern and not trying to take advantage of their work.

What to Pay Interns

If an intern is considered an employee and is to be paid, you need to comply with minimum wage and overtime provisions when determining what to pay interns. Generally, however, interns are paid more than minimum wage. Compensation usually varies for interns based on their major, degree type, and role. Like employees, differences in pay rates usually stem from skill and labor demand. Across national and local pay studies of interns, here are a few general trends:

  • Engineering interns are one of the most highly paid types of interns, typically earning between $15.00-$18.00 per hour.
  • Information technology/computer science interns are also one of the highest paid types of interns, earning between $12.00-$17.50 per hour.
  • Accounting interns are paid higher generally than other types of interns and earn between $12.25-$15.00 per hour.
  • Research, general business, marketing, health, HR, communications, and social sciences interns, generally earn lower pay as interns, usually between $11.00-$15.00 as their skills are in less demand.

Don't forget that benefits are also part of interns' compensation. Close to one third of local employers do not offer any benefits to interns, but the widespread majority offer at least one perk. Interns are often offered these four benefits:

  • Paid time to attend the organization's social events or networking events
  • Rewards and recognition
  • On-site perks such as a cafeteria or fitness center
  • Training, development, and mentorship

Some organizations even offer interns paid holidays, credit towards benefits for time worked if hired after graduation, performance incentives, subsidized parking, and 401(K) - though these benefits generally aren't common.

Interns are a unique segment of the workforce and similar to employees, it's always a good practice to benchmark your pay rates, benefits, and employment practices for interns to see how they compare with other employers. Make sure you're paying fairly and competitively with other employers in the region. Otherwise, you could lose out on some exceptional young talent to your competitor next door.

Additional Resources

2012 ERC/NOCHE Intern & Recent Grad Pay Rates & Practices Survey

This survey, conducted in partnership with the Northeast Ohio Council on Higher Education (NOCHE), collects information from Northeast Ohio employers about their internship and recent graduate employment and pay practices - including intern pay rates and college graduate starting salaries. This survey provides important information for employers planning to hire interns or new graduates in 2012. Patricipate in our surveys here.