When it comes to hiring summer interns, contractors and employees, it's important for business owners to know the legal implications of each type of worker. The lines can understandably get blurry, but it's important to know the different categories.
Here are some of the pros and cons of hiring each type of worker:
Pros: Internships are a fantastic way to gain first-hand knowledge of a business and industry. If your internships provide valuable educational training, similar to training that would be given in an educational environment, you get cost-effective help, while interns gain valuable knowledge and skills.
Cons: Many employers like to "hire" unpaid interns because it's basically like getting an employee for free. But that kind of reasoning can cost you in court, as demontrated in a case against Fox Searchlight Pictures, which didn't pay the interns who worked on the film "Black Swan." Interns cannot be used like regular workers without paying them at least minimum wage. The ambiguity of an intern's role can make for shaky legal terrain that might cost you in the end.
Bottom line: An unpaid internship is not the same as free work. It needs to be educational.
Pros: Independent contractors can fulfill a number of specific needs. They can perform a variety of functions on an à la cate per project basis through tailor-made agreements. Bargaining is more flexible.
Cons: It's pretty easy to get sued by independent contractors when you classify them as independent contractors but make them work like employees. You can assign a task and give a timeframe with a deadline, but that's about it when it comes to your control over them. You can't tell an independent contractor how to work, when to work, where to work or say who else they can for. You can't force them to come into the office or work certain hours. Also, they don't have to give notice before quitting. You also need stronger NDAs and policies on intellectual property.
Bottom line: An independent contractor can't have all of the restrictions of an employee without getting the benefits (or classification) of an employee.
Pros: When someone is a full-blown employee, they have more standard protections and responsibilities. Unlike interns and independent contractors, the employee classification takes much of the guesswork out of hiring, managing and firing. You can require exclusivity, protect intellectual property more easily and have more control over the manner in which the worker completes tasks.
Cons: Employees have a slew of protections that interns and contractors are not entitled to. Business owners can sometimes lose track of constantly evolving state and federal laws. But if you violate an employee's rights, you can get into a boatload of legal trouble.
Bottom line: Out of all three types of workers, employers can exercise the greatest control over employees. But with control, comes responsibility.