Employee classification, Wage & hour

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

One of the constants of education is the need for an internship. Indeed, many students – and sponsoring organizations – have found there to be real benefits to these experiences, which can provide students with a robust and eye-opening understanding about what a real-world work environment looks like. . Accordingly, some dental, optometry, veterinary, and other medical practices consider hiring unpaid interns. That being said, there are some rules your practice must adhere to. Furthermore, there are some back-office HR functions, like electronic onboarding and document storage, that you must have available.

So, what is critical to know when hiring an unpaid intern? Read on for more.

What Compensation is Required for Unpaid Interns?

Unpaid interns can be great. However, remember that you will have to pay your intern unless they complete the primary beneficiary test – more details on this below. 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 software and documentation, like electronic time tracking, to ensure that you are appropriately tracking an intern’s time.

What is the Primary Beneficiary Test?

The primary beneficiary test determines if the intern or the practice is the primary beneficiary of the internship. If the intern is the primary beneficiary, no payment is needed. If the practice is, you have to treat them as an employee and pay them.

The following factors are used in the determination of the primary beneficiary test:

Both parties understand that the intern is not entitled to compensation.
The internship provides training that would be given in an educational environment.
The intern’s completion of the program allows him or her academic credit.
The internship corresponds with the academic calendar.

The internship’s duration is limited to the period when the internship educates the intern.
The intern’s work complements rather than displaces the result of paid employees while providing significant educational benefits.
The intern and the employer understand that the internship is conducted without entitlement to a paid job at the internship’s end.

If 51% or more of the benefits go to the intern, they are the primary beneficiary. Therefore, the intern does not have to be paid, and an unpaid internship is appropriate.

Steps to Compliance When Hiring an Unpaid Intern

You have to follow a few rules when initiating an unpaid internship. Make sure to follow all of these steps to ensure legal compliance.

1. 1. First, establish a clear start and end to the internship. This date should be a fixed time period that lasts over a season or semester. Do not extend the internship: The longer you do so, the more likely that this will unintentionally create an employer-employee relationship, and you will have to pay the intern.
2. Make sure to establish an environment that is like a school or other educational program. You need to conduct training in an atmosphere like that of an academic setting. In addition, your intern should acquire knowledge and skills that they can apply to other work environments. An internship can all be made more accessible if you develop a partnership with a local school. Many interns arrive via an academic program that has already been established, and that intern is looking for additional experience. This can allow your intern to earn credits for participating in the internship.
3. Ensure that the intern — not your practice — is the primary beneficiary of the internship. The unpaid interns should not be performing productive work or providing the employer with an immediate advantage. You also need to make sure that the intern does not displace any regular employees by doing any tasks that would otherwise be covered by a paid employee. Unpaid interns cannot be used to avoid paying another employee overtime or to avoid employee payment altogether.

4. You will need to supervise the intern’s work, providing them with support, feedback, and guidance while avoiding setting expectations that you are “testing out” the intern. You can’t use an unpaid internship to see if an intern would be a good employee, as that may mean an employer-employee relationship exists, and you will need to pay the intern.
5. Finally, make sure to document that the internship is unpaid. Obtain a written acknowledgment from the intern and the school, agreeing to the training, the terms of the internship, and the responsibilities contained in the internship. You can use electronic storage, like those at HR for Health, to store these documents and access them as you need.
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What You Need To Know

Unpaid internships can be fantastic for the intern and your dental, optometry, veterinary, or other medical practice. However, for an internship to be unpaid, the intern has to pass the primary beneficiary test. Otherwise, you’re setting yourself up for a potential legal problem.

How HR for Health Can Help

Hiring an intern — or any other employee — can be a complicated process. At HR for Health, we can provide you with access to HR experts and all the tools your practice needs to grow successfully.

Are you looking for more help? If so, contact us today to set up a no-obligation, fifteen-minute call and learn more about how HR for Health can help your practice.