While the University of Cincinnati does not provide legal advice, the following information should help guide your initial efforts to start an internship/co-op program for your company.
We advise you to consult with your company's legal counsel or contact an employment law professional before you begin the hiring process to determine minimum wage requirements, workers' compensation issues, safety and harassment policies, termination guidelines, and how traditional employee benefits and business responsibilities do or don't apply to interns in your state.
Employee vs. independent contractor
The IRS provides definitions for determining whether a worker is an employee or an independent contractor, with consequences for employment tax and tax withholding.
Workers’ and unemployment compensation
Workers’ compensation boards have found that co-ops and interns contribute enough to a company to make them employees. It’s wise to cover co-ops and interns under your workers’ compensation policy even though you aren’t required to do so. Student co-ops and interns are not generally eligible for unemployment compensation at the end of the assignment.
If a co-op or intern is harassed at your organization and you don’t do anything about it, your organization opens itself to the risk of lawsuits. Take time to advise your co-ops and interns of appropriate workplace behavior, the organization’s harassment policy, and complaint procedures.