Startups · Entrepreneurship

Should I pay startup interns?

Amit Verma na at na

September 18th, 2016

Currently at a Seed stage bootstrapping the business until we secure our first round of financing. We have at the moment some interns helping us with the execution. Keeping in mind our situation do we have to pay or is it ok if we give them a letter of recommendation to contribute with their school credits?

Josh Kirschner Founder & CEO at Techlicious

September 18th, 2016

There are laws at the federal and state level governing when interns are required to be paid. If your interns fall under the definition of employees, not paying them could leave you open to paying back wages and significant penalties should one of the interns file a complaint with the Department of Labor. This may be unlikely to happen, but does create potential legal liabilities that may concern future investors. Based on the short description of the interns' roles helping you with execution, they would almost certainly be classified as employees.
Here is the info from the US Dept of Labor on qualifying internships: https://blog.dol.gov/2014/04/11/when-experience-pays-paid-vs-unpaid-internships [Updated w/correct link]

Nickolay Kolev Freelancer at Private

September 18th, 2016

If you are in California, you cannot not pay interns (anymore). I am not sure how it is for other states, you need to ask a professional.

The general rule is that an intern, with his/her work, shouldn't bring value to the company. An intern is there to learn and be trained, that is why the overall economical effect for your company for using an intern should be negative. Again, if your company benefits from the work of an intern, you are in for big trouble with IRS, don't play with that kind of fire.

I learned this during the incubator one-on-one meetings with lawyers and HR people. Be careful not to lose your business, before you even start.

Shalini PMP YOUR Project, Program, Change initiative, Business Operations and Strategy Manager.

September 18th, 2016

Interns don't and should not equate to free labor. An internship is a learning opportunity for a person (the intern) to get a foretaste of professional life, which includes the concept of labor in exchange for fair compensation. You could deepen the learning experience by allowing a space for both parties to negotiate, and place a monetary value on what they have to offer you and in turn, the value of the opportunity you have to offer them. 

Ema Chuku Designer. Product Developer. Founder @ NuPad

September 18th, 2016

Regardless of the laws, you have the moral obligation to pay an intern (someone performing a valuable task for you). And you should pay them, even if it's minimal. Perhaps you can downsize the number of the interns so as to increase the pay rate.

Another good thing about paying an intern is you are bound to get better work ethic and indirect brand marketing.


Natalie Gershon CPG Marketing Consultant Specializing in Natural Food and Beverage, Building Brands and Common Sense

September 18th, 2016




When in doubt it might be a good idea to hire 1-2 temporary employees at a full or part time basis. While overtime and minimum wages of course would apply, the restrictions on type of work reduce drastically.  

David Martin

September 18th, 2016

I’m not a fan of the unpaid internship but I agree you absolutely must pay attention to the laws, and you should make any moral decision inline with a legal one.  But I think the moral decision is to pay them in line with the law if they are contributing to your company.  An intern who is helping with “execution” sounds like an employee you should be paying.  And if they are truly helping you execute, and they are doing it for no pay, you better find a way to make them happy because you wont find a better future employee.

 

https://www.dol.gov/whd/regs/compliance/whdfs71.pdf   

 

Beyond this, I am assuming you have all the proper legal documents in place for your business and employees and interns.  

Mats Samuelsson IoT Executive > GM, VP Product Management, Business Dev, Marketing | IoT Business Definition, Creation & Growth

September 20th, 2016

Should I pay startup interns?Yes! Slave labor is never a good idea! $15/hour for an Interne will allow them to have some spending money and feel that they are being compensated properly. It is better to employ fewer interns and make sure that they are paid! Mats Samuelsson

Ema Chuku Designer. Product Developer. Founder @ NuPad

September 26th, 2016

@Gabor either you are assigning the intern the wrong duties or you accepted an intern from a university on a "learning purposes".  It's same as hiring an employee for the wrong duties or assigning them the wrong duties. In which case the employer should carry the "unfit blame".

What's "unfair" is employers that charge interns for the purposes of giving them a learning opportunity.

Btw, there's always going to be that learning phase when someone is new at a job, regardless if an intern or employee.


David Martin

September 26th, 2016

I can't really see an intern paying for an experience...time yes, money no.  I can't imagine there would be ANY value working with an employer who would charge.


"Btw, there's always going to be that learning phase when someone is new at a job, regardless if an intern or employee."


This is not completely logical if the intern is not eventually hired.  The time spent to train a new employee who has been hired for the longterm is an investment that should come back in the form of dividends to the company.  As an intern is only for a short period of time, time invested in training or coaching is not necessarily returned to the company unless the intern is hired which does happen.


Furthermore, some colleges require internships.  While some, maybe even most, utilize this experience as an opportunity, some see it as a slack off time for which they are out of the classroom.  Go back to college and think of the group member who did nothing while you did all the work.  Now imagine that individual working for your company.  Do you really want to pay him/her?


Gabor Nagy Founder / Chief architect at Skyline Robotics

September 26th, 2016

@Ema. I agree that charging an intern is unfair. I wouldn't even think of doing it.
And no, it was not an "unfit" issue.
On the contrary!
I knew exactly what I was getting into. I'm happy to teach and get young people excited about robotics and technology, in general.
But, for me to pay a student when it's costing me a significant amount of my time and energy to teach them, would be unfair.
Especially when you're not planning to hire that person.