NY business risk management: Plan a win-win summer internship

Posted by John Cofini on Wed, Jun 04, 2014 @ 01:09 PM

NY-Business-Risk-ManagementIt seems like the perfect solution. You could use some extra help around your business this summer, and there are young workers out there eager to learn and gain experience in the workplace. So you decide to offer a summer internship. Simple enough, right?

As long as you pay heed to some NY business risk management protocol!

Offering an internship can be a real win-win. You get to recruit fresh talent, increase your productivity, and give back to the community by providing a valuable life experience to a promising young worker. But before you take the plunge and give up that extra cubicle to your neighbor’s teenager, here are a few things you should know.

Hiring an intern increases your risk of a lawsuit. Unfortunately, not all internships go smoothly, and lawsuits by interns are on the rise. High profile examples include lawsuits filed by former interns for fashion magazine Harper’s Bazaar, Fox Entertainment Group’s movie “Black Swan,” and major record labels such as Columbia, Atlantic records, and Sean “Diddy” Combs’ Bad Boy Entertainment. You need to be aware of the risks of a disgruntled intern suing you down the road over compensation, hours worked, or some other allegation that you violated their rights.

As with employees, there are laws that apply. Never assume you can take on an intern informally with just a handshake and a prayer. If you’re a for-profit company offering an unpaid internship, you’re subject to the U.S. Department of Labor’s Fair Labor Standards Act (FLSA). It may be an ancient law – passed in 1938 – but its six-point test for hiring unpaid interns is still in use. To be compliant:

  1. The internship must be for the benefit of the intern
  2. The internship must provide similar training that would be given in an educational environment
  3. The employer should not derive any immediate advantage from the intern
  4. The intern must not displace regular employees, and should work under close supervision of existing staff
  5. The intern is not entitled to a job at the end of the internship
  6. The intern understands that he or she is not entitled to monetary compensation

You also need to consider anti-discrimination and anti-retaliation policies, handling grievances, and other protections your regular employees enjoy. And know your state wage and hour laws.

An organized internship is a productive internship. Don’t just “wing it” and have your interns doing menial tasks throughout the day just to keep them busy. Like a regular employee, an intern needs structure and guidance. Take the time to develop a specific internship program with a detailed description of the internship, training experience, and goals.

Find out if you need special New York business insurance coverage. Even if you do everything else right, you’re not a mind reader or a prophet. You can’t always know a person’s intentions and you can’t prevent every future grievance. So it only makes sense to be prepared just in case. The last thing you need is to be hit with a lawsuit – and find out your insurance doesn’t cover you. You might want to consider coverage such as employment practices liability (EPL) insurance to help you mitigate these risks.

Summer internships offer a great opportunity for businesses and interns alike. To make sure your internships are a win-win, plan ahead. Have a well-organized program with specific goals, know the laws, and make sure you’re protected with the right New York business insurance.

To find out what coverage you need for your summer internship program, see the New York business insurance experts at BNC Insurance and Risk Advisors. Want to know a few more unexpected business exposures? Download our free report, 10 unexpected business exposures that obliterate profit in the blink of an eye.” Also, make sure to subscribe to our blog in the upper right corner of this screen.


Tags: new york business insurance, NY business risk management, managing summer internships, fair labor standards compliance