Know Your Legal Obligations Before Hiring an Intern

Know Your Legal Obligations Before Hiring an Intern

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Internships give the next generation of workers hands-on experience in the field, and also secures future workers for companies already dealing with labor shortages. Companies like McCarthy, for example, found 80% of their student interns return to school with a full-time career offer. 

When the construction industry uses interns, it increases the number of skilled workers available for companies within that industry. Having a larger talent pool decreases labor-based project delays; time and money spent on training, and time and resources spent on hiring.

Although you don’t always have to pay interns, you can’t just use them like free labor. Below are the most important labor laws you need to know to hire interns. 

Interns are not employees 

An internship is a partnership that mutually benefits both the intern and the employer. The intern performs tasks for the employer at no cost or low cost and the employer
teaches the intern. 

If an internship is done properly, you don’t have to pay interns. If you choose not to pay an intern, always be up front about it. Never insinuate there may be financial compensation. If you do, you may end up paying wages to the intern if they believed they were
promised compensation.  

If you choose to pay the intern, you may pay them minimum wage, regardless of the standard pay rate for someone in that position. According to, the average hourly rate for construction industry interns is $19. These rates vary state-to-state, but the highest hourly rate is around $21 in states like California and Washington, D.C., likely to account for a higher cost of living in those areas. 

Average age is another important consideration in construction. The median age in construction is 43 years old. While having seasoned workers is a positive way to pass on knowledge, eventually people will retire. Younger workers are needed to continue the trades. Internships allow the younger generations to get a feel for the industry and may encourage more members of these younger generations to consider construction as a career path. 

The legalities of interns 

Interns aren’t employees, volunteers or students. You also can’t classify them as an independent contractor. Since an intern isn’t an employee, you don’t have to give them vacation time or any other employee benefits. However, when they’re interning, they’re the employer's responsibility. If they get injured on company property — unless the internship is done in partnership with a school — that is the employer’s responsibility. If the internship is part of a school program, the school is liable even if the injury took place on employer property. Either way, an intern can’t access workers' compensation benefits, because that program is strictly for employees. 

School-based internships

Internships can be set up in partnership with a high school or post-secondary institution, or you can set one up internally. 

If you partner with a school, your internship will have to meet the school’s standards. And there will be some reporting involved because the school will want to know objectives are being met. In this scenario, the student may earn school credit for completing
the internship. 

According to product comparison company, CompareCamp: “Graduates who were interns or co-op students said that, on average, their salaries are 9% to 12% higher than those without internship or co-op experience.” 

Employer-led internships

If you set up an internship internally, the onus is on you to ensure the intern is benefiting from the experience just as much as the company is benefiting from their labor. Failure to meet these requirements could result in government intervention, legal action and financial compensation for the intern. The amount of time an intern spends working should be equal to that spent learning. 

The guidelines for internships are outlined under the Fair Labor Standards Act. When there’s a labor dispute between an intern and an employer, the courts use the primary beneficiary test. This test uses information about the internship to determine which party was the “primary beneficiary” of the relationship. 

If the court determines the employer was the primary beneficiary, the intern legally becomes an employee and is entitled to all employee benefits and compensation. 

People participating in internships not set up by a school cannot get school credit for it. Before moving forward, employers should look up the appropriate section of the FLSA and their local state labor department.  

Our industry has a real need for innovative and creative minds. Internships help students see first-hand the many exciting paths a construction career offers. Interns also help address labor shortages. Business owners can pinpoint the best candidates for open jobs and then retain those interns when they enter the workforce. The next generation of construction leaders are sitting in a classroom right now, just waiting to be inspired.

About the author: AEM is the North American-based international trade group representing off-road equipment manufacturers and suppliers, with more than 1,000 companies and 200-plus product lines in the agriculture and construction-related sectors worldwide. AEM has an ownership stake in and manages several world-class exhibitions, including CONEXPO-CON/AGG.


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