Image credit: Pexels
- An intern refers to a - typically young - trainee who joins a startup for a given duration to earn industry-specific experience, academic credits (sometimes), and / or a sense of how the field (that they’re interning in) practically functions on a day-to-day basis.
- A program that has advantages for both interns and your startup can have great utility for you, perhaps even providing you with good employees in the future.
- You should plan a strategy (in detail) for recruiting student interns. This strategy should suit your startup specifically.
- It’s always a good idea to not fall foul of the rules set down by the Department of Labor concerning the hiring of interns at startups.
- After determining the skill set that interns will need to have, founders should identify colleges or institutions that train their students for the corresponding skills.
- Startups that invest in a comprehensive orientation program for interns enjoy new team members who are loyal, consistent, and develop positive relationships with everyone else.
- As long as the methods and strategies that are deployed when hiring for full-time roles are effective, there is no reason why these methods should not be used when hiring interns as well.
Who is an intern?
An intern refers to a - typically young - trainee who joins a startup for a given duration to earn industry-specific experience, academic credits (sometimes), and / or a sense of how the field (that they’re interning in) practically functions on a day-to-day basis.
Through internships, interns:
- Gain clarity and understanding about the field that they aim to join
- Network with key people in the industry to build potentially valuable connections
- Develop hands-on knowhow in the field
- Get a leg-up (or professional advantage) over their competitors
How to hire student interns
A program that has advantages for both interns and your startup can have great utility for you, perhaps even providing you with good employees in the future. This is why you should plan a strategy (in detail) for recruiting student interns. This strategy should suit your startup specifically.
When recruiting student interns, keep these points in mind:
1. Decide specific responsibilities
Founders shouldn’t give in to the temptation of recruiting extra resources who can take over the duties of temporarily unavailable employees - instead, they should evaluate their requirements and decide on specific responsibilities if they’ve determined that they need to hire an intern.
If founders strategize in advance and then recruit interns with suitable skill sets, they gain a competitive advantage as they’ll be able to ask the interns to focus on (among other things) the ideas and areas that the startup hadn’t been able to work on yet due to paucity of time and resources. Who knows what unexpected results can emerge this way?
For instance, an applicant studying CS design could assist a startup with its website launch, while a marketing student could help the startup in an awareness campaign as part of its lead generation efforts.
2. Hire with proper effort and thoughtfulness
Oftentimes, founders put in minimum effort into recruiting interns since the interns aren’t full-time employees. However, this isn’t the right approach. As long as the methods and strategies that are deployed when hiring for full-time roles are effective, there is no reason why these methods should not be used when hiring interns as well.
Try to find a record of colleges around your office. Then, once you shortlist the appropriate universities, begin hiring from them.
3. Spread the word on social media
Considering how college students mostly seek out internships online (including and especially on social media), it makes perfect sense for startups to make the online world a part of their intern hiring strategy. They could embrace platforms like Facebook, Twitter, and LinkedIn (and, of course, their own official website) to raise awareness about any internship openings that they have.
Instead of founders having to spend their time doing all this by themselves, they’re better off entrusting a team member to manage the recruitment process. The best choice for this would be someone who will eventually have the most direct involvement in training and supervising the interns. Alternatively, if the startup has dedicated HR staff, then they would be ideal for managing the hiring process.
Whoever is managing the process, they could get productive with social media by circulating glowing testimonials from students who’ve previously interned at the startup, reaching out to potential candidates from the appropriate online student groups and forums, and / or publishing content that is attractive and useful (to potential hires).
Not only will such techniques develop the startup’s image and reputation but they might also pique the interest of some great potential applicants.
4. Train and onboard interns the right way
Startups that invest in a comprehensive orientation program for employees enjoy new team members who are loyal, consistent, and develop positive relationships with everyone else. The same benefits apply to interns who are greeted by a great onboarding process that is specially built keeping them in mind. When this happens, interns can begin their engagement with the startup in the best possible way, undergoing specialized training for the duties that they must tend to in the coming months.
5. Understand your legal commitments concerning compensation
Even before one considers the legal standpoint when it comes to compensating interns for their labor, it is worth noting that paid internships (as opposed to unpaid ones) not only help your startup to attract great talent but also serve to incentivize them to achieve great results.
As for any legal obligations put forth by state and federal laws, assuming that you aren’t running a non-profit, the Department of Labor is quite clear-cut about the circumstances under which your startup can extend an unpaid internship. Interns whose treatment and responsibilities tilt toward those of a standard employee have a just claim to receive minimum wage and compensation for overtime. Startups who place their interns in the wrong category and break the laws are vulnerable to penalties.
6. Offer exciting benefits
Startups can often not compete with more established companies when it comes to compensating their student interns. There is something that startups can do, however, and that’s complementing the compensation package with benefits that would appeal to students (think no formal dressing requirements, flexible scheduling, Friday Football, or specially themed snacks for every day of the week).
Founders, get creative!
7. Keep an eye out for potential employees
As your chosen students go through their internship programs, keep an eye out for interns who could convert to great full-time employees if and when your startup is in need of their corresponding skill set later on. In fact, your intern hiring process should be aligned with this potential for conversion into full-time roles and you should prioritize applicants who show signs of effectively converting in the future. In other words, both the intern roles that you put out and the applicants that you finalize during the intern hiring process should be in line with the full-time roles that might open up at your startup in the future.
How to hire unpaid interns
It’s always a good idea to not fall foul of the rules set down by the Department of Labor concerning the hiring of interns at startups.
There are a few tips that you can follow for hiring unpaid interns in a compliant way.
#1: The intern should benefit more than you do
The Fair Labor Standards Act mandates that employees at a startup are entitled to, at the very least, the minimum wage except when they meet certain criteria. Thus, a compliant unpaid internship program successfully fulfills these criteria before hiring unpaid interns. The key is to ensure that your unpaid interns can not be categorized as employees by the DOL.
How does the DOL ascertain whether or not an intern is an employee? It uses the “primary-beneficiary test”, a test that comprises seven criteria. It is not necessary to meet all of these criteria for a startup to legally hire unpaid interns. Instead, the DOL will take into account the entire scenario. Ever since the primary beneficiary test has become law, it is speculated that it might result in a revival in unpaid internships given the fact that not all seven criteria have to be met.
With that said, the all-important requirement for a compliant unpaid internship program is still that the program must exist to, first and foremost, benefit the person being hired. In other words, the value that the unpaid intern derives from the program must be greater than the value of the duties they perform in the duration of their stint. The startup should not appear to be exploiting the intern without compensation - instead, the intern should be engaged in honing their skill set in a meaningful way that fundamentally benefits them rather than the founders.
#2: Sync with universities
When the DOL goes about ascertaining whether an unpaid internship is legally compliant or not, one parameter it looks at (though does NOT mandate as a prerequisite) is whether the intern gets academic credits or not. If they do, then it serves as an indicator of academic approval, which helps mitigate the chances of running afoul of the law.
Even if a startup is not working with a school program, there could be value in coordinating with the intern’s academic calendar. Another factor that is taken into account is whether (and how much) the school program has room for the student’s academic obligations: this is where the academic calendar becomes so important.
#3: Keep abreast of state guidelines
A large number of states adhere to their personal labor / employment laws, including having their own exceptional circumstances that can be applied to interns. There can be incredible variance among the states: some might adhere to the previous six-factor DOL test, others might adhere to the new seven-factor “primary-beneficiary” test, while yet others might follow an entirely separate set of criteria.
Therefore, the state laws are worth checking. Startups who hire in more than one state should check the laws in all the appropriate jurisdictions and understand which test applies to their unpaid internship program. They can do this by visiting the site of the labor agency of the state.
#4: Draft an internship plan
Founders must create a crisp plan for the internship (spanning a maximum of two pages) that comprises:
- The kind of responsibilities that will be involved
- The academic parts of the program
- The key benefits that would be received by the intern
In a way, this will be an acknowledgment that will list - among other things - the experiences that the interns will ideally have. Founders should sync with the interns frequently to ascertain whether the program is going as planned. In order to stay on the DOL’s good side, the acknowledgment should clearly mention that the intern should not expect any compensation or guaranteed full-time employment at the end of the stint.
#5: Every intern’s case is unique
Keep the flexibility of the primary-beneficiary test in mind as there is no singular criterion that qualifies an intern as an employee under the FLSA: at least, that’s the view that the justice system has adopted. Whether an intern qualifies as an employee will be determined by the particular context of every case.
For-profit startups should begin by assuming that they need to pay their interns and then work up from that point onward to justify the unpaid internship program. They can use arguments such as:
- The intern being the primary - and greater - beneficiary of the program vis-à-vis the startup
- The internship existing to be of educational benefit to the intern
- The startup not deriving any immediate benefits from the internship
#6: If in doubt, stick to the minimum wage
If there is confusion regarding the same, then the startup is significantly better off paying the minimum wage. If the matter goes to court, attorney fees might be quite expensive for startups (even in cases where the court determines the legality of the unpaid internship program). In the time that it would have taken to arrive at this ruling, startups would have incurred considerable litigation costs, not to mention the time and headspace of the founders and the team. Things would have been far easier if the interns had been compensated with minimum wages. Therefore, founders should weigh (or evaluate) the hefty price that they might incur if the unpaid internship program does not fulfill the local, state, and federal legalities.
How to hire college interns
#1: Release the skill set needed
Unlike in a conventional full-time job where founders have a lot of time to train the new hire, internships are time-bound. Therefore, the college student that will join your startup should already have the skills needed for the job. You should hire accordingly (with a clearly stated focus on skill set) and should release a list with the skills that applicants are required to have.
#2: Set a budget
Founders who are unaccustomed to running internship programs might be surprised to learn the eventual costs of recruiting a quality intern (assuming that the program is not an unpaid one and you need to properly compensate the intern for the work they do). Unpaid interns can be legally hired only by nonprofits / NGOs or for-profit startups who don’t flout the FLSA. Therefore, determine a proper budget for the program.
#3: Look for relevant colleges
After determining the skill set that interns will need to have, founders should identify colleges or institutions that train their students for the corresponding skills. A requirement for an accounting intern should lead you to academic institutions that offer great accounting programs. Similarly, if you’re looking to hire a software development intern, you would likely browse schools that offer computer science programs.
You could reach out to the institution through any of the following options:
- College career services office / center
- The college website (look for any info on internships)
- Faculty adviser of the relevant department (eg. business studies department or computer science department)
#4: Use job boards and social media
You shouldn’t stop after reaching out to academic institutions - instead, turn your attention to college students actively looking for internships on job boards. Indeed is a good example of this. There are also specialized job boards that focus on internship programs; besides, the career services centers of several institutions operate their personal job board. You should pursue all these channels.
In addition to job boards, you should spread the word about the internship opening(s) on social media sites (like LinkedIn, Twitter, and Facebook). This will inform college-goers about the internship programs you are offering.
#5: What to do after selecting an applicant
Irrespective of whether your interns are hired under 1099 or W-2, they will most likely be temporary additions to your startup. Many a time, they would be recommended to you by the department’s faculty adviser; sometimes, there would be very few interns (perhaps even less than 3) for the specific skill set that you need. In such cases, it might be a good idea to skip the comprehensive interview procedure and structure the program on the basis of what the college needs (for eg., an internship agreement).
Learn more with us
- Employee goals in early stage startups
- How to do employee performance assessment?
- Managing employee resignations
- How a startup can offer a severance package?
- Learn more about accounting for startups
Access more guides in our Knowledge Base for Startups.
We can help!
At AbstractOps, we help early-stage founders streamline and automate regulatory and legal ops, HR, and finance so you can focus on what matters most—your business.
If you're looking for help with understanding how to hire interns, get in touch with us.
Like our content?
Subscribe to our blog to stay updated on new posts. Our blog covers advice, inspiration, and practical guides for early-stage founders to navigate through their startup journeys.
Note: Our content is for general information purposes only. AbstractOps does not provide legal, accounting, or certified expert advice. Consult a lawyer, CPA, or other professional for such services.