Compliance. It’s a scary word, but it shouldn't be. Compliance is the backbone of any successful business, but not enough companies understand the importance of compliance and how to manage it effectively. This is primarily a result of ignorance or misconceptions, but it can result in unwarranted offenses and excessive fines.
Companies need to have the right framework in place for their interns in order for them to function at maximum efficiency. Internships offer many benefits such as mentorship and networking opportunities, but without proper compliance procedures implemented throughout an organization's entire structure, these advantages are lost for both the employer and employee!
Compliance is an important aspect to any business, but it's especially important for companies that hire remote interns.
Remote internships are a growing trend and they're not going away anytime soon. As the workforce becomes increasingly mobile, more and more employees will look for opportunities where they can work from home or remotely on occasion. This means you'll need to be prepared with policies in place so that your company complies with federal laws such as FLSA (Fair Labor Standards Act).
The importance of compliance doesn't end when an intern leaves your program.
The importance of compliance doesn't end when an intern leaves your program. In fact, it's at this point that you should be even more careful about compliance. If you've done a good job keeping records and complying with the law while they were in your program, then reporting wages to the IRS will be much easier than if there were no records at all.
You must keep records for each intern who worked for you during the year (even if they didn't work full time).
To avoid legal trouble, you must have a clear understanding of your responsibilities as an employer
Your responsibility as an employer is to make sure that your intern program meets the requirements of all applicable laws. This includes making sure that you have proper documentation on file and adhering to all labor laws. It's also important to remember that you can be held liable for the actions of your employees, even if they weren't acting within their official capacity as representatives of your company.
For instance, It depends on the specific circumstances of the situation. Generally, an intern is considered an agent of the organization or company they are interning with, and their actions may be attributed to the organization or company under the doctrine of "respondeat superior."
However, if the intern is acting outside the scope of their duties and responsibilities, and their actions are not authorized by the organization or company, then the organization or company may not be liable for the intern's actions.
If the intern's actions are illegal or harmful, you should consult with a legal professional to determine the specific liability and potential consequences. It's also important to have clear policies and guidelines for interns to follow to minimize the risk of liability issues arising.
If you're unsure about whether or not your company is classified as an employer under federal law, consult with a lawyer before proceeding with any new hires or changes in policy.
How an employer of record (EOR) can help with compliance
An employer of record (EOR) is the company that is legally responsible for an intern. The EOR helps you comply with federal and state employment laws, avoid legal trouble and make sure you are fulfilling your reporting requirements (in other words, they make your life easier so you can focus on what you do best).
Employers of record (EORs) can be beneficial for companies when it comes to hiring and being in compliance with internships in several ways:
- Compliance with labor laws: EORs can help ensure compliance with local, state, and federal labor laws, including minimum wage, overtime, and other employment regulations. This can be particularly important for internships, which may have different regulations than regular employment.
- Payroll and tax processing: EORs can handle payroll processing, tax withholding, and other administrative tasks related to compensation for interns. This can simplify the process for the company and ensure that the interns are paid accurately and on time.
- Risk management: EORs can help mitigate the risk of potential liability issues related to internships. They can provide guidance on how to structure internships in compliance with labor laws and other regulations, and can handle legal issues if they arise.
- Access to benefits: Not that many interns will be eligible for benefits, but EORs can provide interns with access to benefits such as health insurance, retirement plans, and other perks that may not be available to them through the hiring company.
Overall, using an EOR for hiring and compliance with internships can help companies focus on their core business functions, while ensuring that their internship programs are structured in compliance with applicable regulations and laws.
Your liability extends beyond hiring and firing to include recordkeeping and reporting requirements
To ensure your program is in compliance, you'll need to keep track of all the hours that interns work. This includes both their regular and overtime hours, as well as any recordkeeping requirements that apply to your organization's industry.
Depending on your organization's industry, there may be additional payroll tax requirements related to unpaid training programs like internships and apprenticeships. For example:
- If you're an employer with at least $1 million in annual gross revenue or if you have at least 50 full-time employees, you must pay FICA tax (Social Security and Medicare) on the wages paid to all employees, regardless of the number of hours worked or their annual salary.
- Under the Fair Labor Standards Act (FLSA), non-exempt employees must be paid overtime wages (time-and-a-half) for any hours worked over 40 in a workweek. Failure to pay overtime wages is a violation of federal labor laws, and employers who violate the FLSA can be subject to legal action and penalties.
Complying with federal and state employment laws can save you a lot of time, money, and headaches in the long run
Save yourself a headache
Complying with federal and state employment laws can save you a lot of time, money, and headaches in the long run.
The importance of compliance doesn't end when an intern leaves your program. You are responsible for complying with all applicable employment laws until the end of their employment or internship period if they were paid by someone else (e.g., another company). It's also important to note that there may be additional requirements for remote interns who aren't located on your premises during their work assignments.
We hope that this article has helped you understand the importance of compliance and how it can affect your business. If there's one thing we know, it's that staying compliant with all those laws can be a challenge, after all, that’s what we do.
Our best tip is to work closely with an expert who understands the ins and outs of employment law, then you'll be well on your way!