With FLSA rules changed, should you pay your summer interns?

Three young people sitting on benches in an office building

In January, the U.S. Department of Labor (DOL) eliminated its six-factor test for determining whether workers should be classified as unpaid interns or employees entitled to compensation under the Fair Labor Standards Act (FLSA). In its place, DOL implemented a more employer-friendly “primary beneficiary” test: If the intern is the primary beneficiary of the internship (i.e., they get more from it than the organization does) you don’t have to pay them.

But who determines who gets more from the deal? While employers may be tempted to offer unpaid internships in the name of cost savings, paying interns not only helps ensure adherence to FLSA, but also helps organizations better compete for entry-level talent.

According to Collegegrad.com, employer demand for interns this year is likely to be high. By February, internship postings had already surpassed each of the past two years, though postings typically peaking in March, according to research by Indeed’s Hiring Lab.

So, how can you help ensure you have a great internship program that attracts top talent? Consider the following:

1. Make the experience meaningful.

Now that you’ve addressed the workforce needs of Millennials, it’s time to consider the next group to enter the workforce – Generation Z. While it’s always been important to plan an internship program thoughtfully, Generation Z responds particularly well to structure and has been told since an early age that “real-life work experience is important.”

Take the time to create a road map for your interns, one that articulates expectations, goals and objectives, and how assignments will build upon each other. Rotate interns throughout different departments to provide them with varied duties and responsibilities. A “work plan” outlining goals and processes for the full scope of their project can be an incredibly powerful tool for interns, as seeing how their work fits within the organization overall helps create a more meaningful experience for them – and you.

2. Understand and appreciate the nuances of Gen Z.

Gen Z’ers carefully plan and plot their futures, appreciate (and seek) diversity and possess an entrepreneurial spirit. It’s not enough to just share talking points about your organization’s employee resource groups and unconscious bias training. Is your organization already “walking the walk?” Because Gen Z wants to be a part of an inclusive workplace.

Focus on creating an environment where you teach and support autonomous execution. Don’t just focus on an intern’s role at your company — show them the bigger picture. Help them understand your company’s history, your industry and how the company fits within the marketplace. Gen Z is said to have a short attention span, so a series of short training sessions (50-minutes or less) is ideal, and using graphics and tech-based interfaces will go a long way toward keeping their attention.

3. Build authenticity to attract the best and brightest talent.

Gen Z can see through marketing ploys. Unless you are authentic about what kind of organization you are and where the potential for growth lies, they won’t be interested. Build authenticity by genuinely focusing on their experiences. Interns should understand how they can grow their careers with you, as Gen Z’ers are most attracted to situations in which they can have multiple roles within a single organization. Paint a picture of what their future could look like so they can envision themselves growing within your company — instead of job-hopping.

To pay or not to pay?

While the DOL has adjusted the rules related to payment of interns, the overarching guidance has fundamentally remained the same: Does the internship benefit the intern or the employer? There are seven factors the DOL has issued as of January 2018 – including the extent to which the internship provides training, education and academic commitments for the intern – to help employers determine the “primary beneficiary” of the internship.

Rather than reviewing the jargon to understand if your situation warrants paying of interns, consider the following: With competition being so tight in many industries, would not paying interns put your organization at a disadvantage? Remember, top organizations are already paying interns for their services and the best and brightest will likely be drawn to these opportunities.

As you contemplate offering internships, understand that the opportunities they present are both good business and good for business. For the intern, an internship may help solidify an occupational direction, provide valuable work experience and result in stronger networks and more career-building connections. At the same time, your organization receives services at a lower cost while gaining a fresh perspective.

But perhaps the most valuable payoff comes once interns complete their assignments. With positive, productive experiences under their belts as a result of successful internships, they become your best advocates, speaking favorably to other strong candidates about your company. Now that’s certainly a boon to recruitment.

About Pamela Murray

Guest blogger Pamela Murray is a Senior Human Resources Consultant with the Willis Towers Watson Human Capital Pra…
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