The use of unpaid interns in your practice

My tax and advisory practice is located in New York, with many of our clients located in New York City. New York is an exciting place for both students and those beginning their careers. New York is a center for the arts, finance, fashion, technology, and startup companies in all industries.

Many companies offer“unpaid” internships to college students or recent graduates. These interns are excited about the prospect of “real work” in their industry with a small, growing company.

Regardless of whether the intern agrees with the arrangement, the use of unpaid interns can easily violate federal and state labor laws.

Generally, for an individual to be considered an unpaid intern rather than an employee, certain specific criteria need to be met according to the Department of Labor. Specifically, the ”intern” needs to be part of a training program, and not be treated as an employee. The six criteria necessary for an internship training program are:

1. The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocation school;

2. The training is for the benefit of the trainee;

3. The trainees do not displace regular employees, but work under close observation

4. The employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion the employer’s operations may actually be impeded;

5. The trainees are not necessarily entitled to a job at the completion of the training period; and

6. The employer and the trainee understand that the trainee is not entitled to wages for the time spent in training.

Notably, the law is unsettled as to whether all the criteria must be met or if only most of the criteria need to be met for an individual to be considered an employee under the law.

This article on the NYU website discusses interns and volunteers.

Without careful documentation, an “intern’s” complaint to the US or NY Department of Labor could result in the company being required to retroactively pay the intern for all “volunteer” hours worked.

I am not an attorney. It might be advisable to have your attorney draft a blanket memorandum of understanding for use between the Company and any current or future interns. You might also discuss this issue with your enrolled agent.

Have you told me lately...

Those of us who are enrolled agents frequently hear "what is an enrolled agent?" from clients, the public at large, and sadly, other Circular 230 professionals. Occasionally, even IRS personnel get it wrong occasionally.   I know many an EA who has copped out and refer to themselves as "tax accountants" simply because they are "tired of explaining it to people".   My disdain for that laziness is for another post.

I maintain that if enrolled agents delivered the same message to the public at the same time, the same way, we could move beyond the 13% public recognition we currently enjoy.  (A few years ago NAEA retained a marketing firm to determine our brand penetration with the general public.  As of then it was 13%).

Where is my point?   On warm summer days when I don't have client appointments, I like to dress down at work.  Typically I look like Dr. Sheldon Cooper of the "Big Bang Theory" with a Marvel Super Hero themed tee-shirt.   Today I wore my enrolled agent tee-shirt, which cost $6 at the Florida Society of Enrolled Agents conference last month.

I made three stops this morning, and three people asked me "What's an Enrolled Agent"?  I offered up the quick elevator speech "Enrolled Agents are federally authorized tax practitioners who offer tax consultation, representation before the taxing authorities, and tax preparation".  On a better day, I would have had business cards in my wallet to offer to these folks.

Today's moral:  If we as enrolled agents don't tell the world who we are, who will ?