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Should I pay startup interns?

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?

20 Replies

Josh Kirschner
6
0
Josh Kirschner Entrepreneur • Advisor
Founder & CEO at Techlicious
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]
Natalie Gershon
0
0
Natalie Gershon Entrepreneur • Advisor
CPG Marketing Consultant Specializing in Natural Food and Beverage, Building Brands and Common Sense



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.
Shalini Trefzer, PMP
2
0
Shalini Trefzer, PMP Entrepreneur
YOUR Project, Program, Change initiative, Business Operations and Strategy Manager.
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
2
0
Ema Chuku Entrepreneur
Designer. Product Developer. Founder @ NuPad
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.


Sidney Sclar
0
3
Sidney Sclar Entrepreneur
SID the SECURITY PRO at sidthesecuritypro.com
This is a question that should have been resolved when the Young Professionals were hired. Now. Go with the flow.
Rod Abbamonte
0
1
Rod Abbamonte Advisor
Co Founder at STARTREK / @startupHunter / @startupWay / @CoFounderFound / @GOcapital / @startupClub / @lastminute
All effort need to be compensated. Entrepreneur and interns need to negotiate better return for both.
David C. MSE
0
0
David C. MSE Entrepreneur
CEO at Business Development

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.

Nickolay Kolev
3
0
Nickolay Kolev Advisor
Freelancer at Private
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.
Mats Samuelsson
1
1
Mats Samuelsson Entrepreneur
IoT Executive > GM, VP Product Management, Business Dev, Marketing | IoT Business Definition, Creation & Growth
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
Gabor Nagy
1
2
Gabor Nagy Entrepreneur
Founder / Chief architect at Skyline Robotics
It's a tough question, because interns don't necessarily add value for your startup (other than good will / PR). On the contrary...
I've had some summer interns for my robotics startup and they were brilliant for their age, but what took them 2 months, I could do (and did) in 2 hours.
Sometimes, they went backwards, ruining the CAD files I prepared for them. Which is OK. They were learning.
You can't expect someone to learn mechanical engineering, CAD, electrical engineering etc. in a month or so at a level where they would be actually helping you.
Each of those is a 4-year college degree...
Even a college graduate will take longer than that to learn a particular CAD application, software code base etc.
Interns understand this. In fact, mine told me that some places charge interns for the opportunity to learn and he really appreciated to be learning more advanced stuff at my startup, for free.
I spent a lot of time teaching, that I could have spent designing and coding, so not only did I not benefit, it cost me to have an intern.
Which I didn't mind. I like teaching etc., and I wouldn't even think of charging an intern, but to pay him on top of that, from my shoestring budget, would have been mighty unfair.
And there's the California law Nickolay mentioned...
callawyer.com/2016/03/unpaid-internships-are-not-uncommon-but-are-they-legal

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