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The Cost of Free Labor and How to Smartly Hire Interns and Volunteers

As an entrepreneur, you’re probably getting sick and tired of doing it all yourself, but your small business may not be ready to hire on more employees. If you’re considering hiring an intern because it’s “free labor,” be careful that it doesn’t cost you much more in the form of a lawsuit. In addition to paying for you own legal counsel, if found at fault of violating the Fair Labor Standards Act (FSLA), you can owe your former intern up to two years of back pay, which can be doubled as liquidated damages, and then also covering his or her legal fees.

Here are the six qualifications of calling a worker an intern and treating them as such (meaning not paying them for their time or offering any benefits):

1. The intern should be getting similar training to what would be offered in an educational setting

2. The intern does not take the place of a regular employee

3. The intern should not be necessarily promised a job at the end of the internship

4. The intern and employer must both agree that they are not entitled to wages for the internship

5. The internship must be designed in a way to benefit the intern, not the employer

Aside from hiring an intern, you can also bring on volunteers. However, hiring volunteers comes with its own stipulations:

1. The services charged to a volunteer should be different than those performed by employees (like #2 above, a volunteer should not displace an employee)

2. The volunteer shouldn’t perform full-time work

3. The volunteer can set his or her own schedule

4. The volunteer should be operating to serve his or her own beliefs, be they charitable, religious, humanitarian, civil, or other - not to eventually gain employment at your company

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