What You Need to Know Before Hiring an Unpaid Intern for Your Practice

Work experience is one of the most valuable things you can offer someone. It opens up exclusive career opportunities, and now, many students and their sponsoring organizations want real-world work, not just a great education. To create those opportunities without absorbing high costs, many health, dental, optometry, and veterinary practices consider hiring unpaid interns. But it only works if you’re hiring them for the right reasons, providing compensation when necessary, and staying compliant with the Department of Labor’s standards.

We recommend establishing relationships with the schools and educational institutions in your area, then working to design a program that allows students to learn at your practice. The schools likely have all of this planned out for you, since they want to support small businesses like your practice.

By the way, we’re talking about fresh graduates or college students who want to learn on the job. We’re not talking about postgraduate residency training (PGY-1 residents) who work under the supervision of attendings and provide patient care. For now, we’re focusing on the compliance rules and best practices for hiring an unpaid intern to help out at your practice, learn the ropes, and gain the hands-on work experience they need to jump-start their careers.

Understanding Compensation Rules for Unpaid Interns 

It’s the question at the top of everyone’s mind. Do you have to pay interns? Or should you? Where’s the line between an unpaid internship and actual employment? The Department of Labor has made this easy for you. Under the Fair Labor Standards Act (FLSA), there is a 7-part primary beneficiary test. If an intern doesn’t pass the primary beneficiary test, you will have to pay them at least minimum wage and may have to pay them overtime if they work more than forty hours in a workweek. If you wind up hiring an intern, you must have the appropriate documentation and time tracking, which of course HR for Health can help you with.

What is the Internship Primary Beneficiary Test? 

The DoL’s primary beneficiary test determines who benefits from the internship. Is the intern gaining value, or is it just the practice? If the intern is the primary beneficiary, the arrangement can remain unpaid. They’re getting “paid” in work experience and mentorship. If your practice is getting more out of the deal, you have to treat your intern as an employee, complete with a paycheck. Here’s what’s on the primary beneficiary test:

1. Both parties understand that the intern is not entitled to compensation.
2. The internship provides training that would be given in an educational environment.
3. The intern’s completion of the program is tied to academic credit.
4. The internship corresponds with the academic calendar.
5. The internship’s duration is limited to the period when the internship educates the intern.
6. The intern’s work complements rather than displaces the result of paid employees while providing significant educational benefits.
7. Both parties understand that an internship now does not necessarily lead to a job offer later. 

Again, this is not how it works for postgraduate medical internships. That’s a different type of employment entirely.

When Should You Consider Paying Interns?

Legally, if you’re benefitting more, then the answer is clear. You have to pay your interns as employees. But if the intern is the primary beneficiary of the arrangement, you still might want to consider paying them.

• In a survey, paid interns got more job opportunities than their unpaid peers.
• Not all students can afford to work without pay, and unpaid internships screen out possible good matches and may even widen the wage gap.
• Hiring interns can be surprisingly competitive, and providing a nominal salary can help put you on the top of their list.
• If you aren’t 100% sure how the primary beneficiary test works out, paying your intern covers your compliance bases.

With or without payment, an internship can still be valuable. Your practice gets much-needed support and you get to mentor a rising star. The student gets college credits, hands-on experience, and connections with experts in the field (that’s you!). An internship could even be a shortcut to a long-term career at your practice.

Step-by-Step Compliance for Hiring an Unpaid Intern 

Want to hire an unpaid intern for your health or dental practice? Great! Let’s make sure you do it legally.

1. First, establish a clear start and end date for the internship. This date should be a fixed time period that lasts over a season or semester. Extending the internship could unintentionally create an employer-employee relationship.
2. Establish an environment that is like a school or other educational program. You don’t have to set up a classroom, but you do need to make sure this is a learning opportunity. After all, this may be for college credit. This process may be more accessible if you develop a partnership with your local educational institution or academic program.
3. Ensure that the intern (not your practice) is the primary beneficiary of the internship. Your practice can certainly benefit from their services, but the intern should have the advantage according to the primary beneficiary test. Do not use this as an opportunity to displace any regular employees by giving an intern tasks that would otherwise be covered by a paid employee. 
4. You will need to supervise the intern’s work, providing them with support, feedback, and guidance. They’re there to learn. However, don’t give them the impression that this is part of onboarding for a real job. If you want to hire them later, you can, but that is not the point of hiring an unpaid intern. 
5. Finally, make sure you get your documents in order. Obtain a written acknowledgment from the intern and their school that agrees to the training, terms of the internship, responsibilities, and the benefits they gain from working at your practice.

Keep an Eye on Compliance

Hiring an unpaid intern is a spectacular opportunity. Your practice gets ahead while providing a student with a running start at their career. The catch is that for an internship to be unpaid but still legal, the arrangement has to have clear benefits for them. Otherwise, you’re setting yourself up for a potential legal problem by misclassifying an employee as an unpaid intern. 

Employee misclassification is a risky mistake that we see practices make way too often. One of many, actually. Try as you might, we bet you’re making HR compliance mistakes. Take our five-minute quiz to check your practice’s risk level.