Paid internships offer students and new workers without much experience an opportunity to work for an employer without going through the standard recruiting and application process. In addition to payment from the employer, paid internships sometimes involve a college or university that offers the employee course credit for the internship. Other internships might focus on career development or experimental learning in short-term scenarios.
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Functions of an Internship
Paid internships usually require interns to work one or several days per week. Although shifts and hours vary widely from one internship to another, paid interns work schedules closer to those of part-time employees. This allows interns to work around their existing course schedules or other part-time jobs. It also means that paid interns often can't use an internship as a sole means of income or financial support, due to the limited hours and generally low pay.
Considerations for an Internship
The federal Fair Labor Standards Act outlines the responsibilities employers hold toward their workers. It does not differentiate between interns and employees. However, it does define employees as workers who earn a wage. This means that paid interns are employees. They do not hold a separate designation for legal purposes such as taxation or worker rights. It also requires employers who offer paid internships to comply with federal and state minimum wage laws in determining intern compensation. Unpaid interns and volunteers are not employees because they do not earn a wage.
Effects of Internship Employment
Because paid internships constitute employment, both interns and employers must take certain steps. Interns must report the income they receive on their state and federal income taxes. Interns may still be eligible for unemployment benefits in states that use a low-income threshold to determine eligibility, but when states require unemployment benefit recipients to be available to work, it means that an intern who receives unemployment payment can't turn down full-time or part-time job offers because of internship scheduling or obligations. Employers become responsible for reporting paid interns and withholding taxes. Employers also need to comply with federal and state worker safety laws.
Consequences and Benefits of Internships
Paid internships are usually not an alternative to getting a regular job. Employers who offer paid internships may use the hourly wage as an incentive to attract qualified interns with strong academic backgrounds, but the real benefit is sometimes just the work experience and chance to meet experts in the field. Because of the tax repercussions and high level of competition for sought-after paid internships, students often pursue unpaid internships instead. If you're considering an internship, speak to someone at your school's career center or internship office to make sure you understand the consequences and benefits of each type of internship.
Alternatives to Internships
Employers and prospective interns can form a working relationship outside of the traditional paid internship. An unpaid internship, in which the intern receives only experience or, in the case of a student, college credit in exchange for labor, is one possibility. Another option is a temporary paid position, with the employer paying the employee as a regular member of the workforce, with the understanding that the job is not permanent. Finally, employers can hire new workers for a probationary period of time, after which the employer will decide whether to continue the arrangement, based on a performance evaluation or feedback from managers and colleagues.