Hiring interns is a great way to ease a startup’s workload while giving a young talent the chance to experience an exciting work environment. However, the onboarding can become challenging for German companies in the U.S. if they are not yet incorporated.
The big question founders will have to answer is whether they want to use German interns located in the U.S. or if they want to have U.S. citizens as interns.
Hiring U.S. citizens may be the easiest option to go with because citizens are already eligible to work in the U.S. and might not even have to relocate.
In some cases, it is acceptable not to pay interns. Having unpaid interns could be beneficial because unpaid interns require less red tape and the U.S. tax authority may never need to get involved. However, good unpaid interns are hard to come by because most high-quality prospects are typically seeking competitive compensation.
There are also several requirements that need to be met to justify paying workers under minimum wage. For example, unpaid interns sometimes need to be responsible for a variety of different work and assignments – they should not have the same task for the entire duration of the internship. The specific requirements that need to be met to legally pay an intern under minimum wage vary from state to state. Failure to abide by these requirements could land a company in a significant amount of trouble with U.S. labor authorities, so it is highly recommended to seek expert advice from an experienced lawyer before unpaid internships are established.
Occasionally, a prospective intern’s university either requires them to complete an internship or grant them credit for the completion of an internship. If a company’s internship program meets their university standards, it is possible to attract an unpaid intern in this way.
Most of the time interns are paid a stipend amount, similar to being paid a salary. If a German company is not yet incorporated in the U.S. and still wants to pay its interns, it will need to pay its interns from Germany. In this case, payroll will most likely take some extra time and attention. International transactions tend to be slower than normal while factors like exchange rate need to be taken into account.
Depending on the situation, the company may be responsible for withholding U.S. employment taxes from their paid interns’ stipends. Be aware that this may constitute a business presence in the U.S. and render the company obligated to file for U.S. taxes. If this is the chosen route, it is wise to contact a tax expert who has experience with this situation.
U.S. students that are eager to work for innovative startups typically use online channels to find their internship. Two popular job sites where U.S. citizens searching for internships can be found are AngelList.co, a job board specifically geared for startups, WayUp.com, a site for students and recent graduates seeking internships, and JoinHandshake.com a platform that connects university career centers with employers.
Bringing a German citizen from Germany to work in the U.S., or hiring one already in the U.S., may be more convenient for your company. Although, there will be a smaller pool of applicants because German citizens are only authorized to work in the U.S. under certain circumstances.
Germans that wish to intern in the U.S. will be smart to pursue a J-1 visa. On a J-1 visa, German citizens, typically students, participate in a work-and-study Exchange Visitor Program in the States.
J-1 visa holders are prime candidates to hire as interns at startups. There is virtually no extra work required on the employers end to onboard a J-1 visa holder versus hiring an American worker. This is because a third party normally does all the heavy lifting in exchange for a fee. Organizations typically sponsor students for the visa and take care of the red tape. For example, our partners at the German American Chamber of Commerce, New York (GACC NY) are official sponsors of J-1 visas and help match foreign students to U.S. internship programs.
If a German citizen is already studying in the U.S., their F-1 student visa grants them limited eligibility to work in the States.
F-1 visas are explicitly for students and allow Germans in the U.S. to take on unpaid or paid internships. There are limitations for how much and where these students can work. Students on this visa are a good target for companies located on a college campus that only need a part-time intern, about 20 hours of work a week.
If a company is not located on a college campus, students on an F-1 visa have to utilize either the Curricular Practical Training (CPT) or Optional Practical Training (OPT). Much like the J-1 Exchange Visitor Program, the CPT and OPT leave very little burden on the employer.
Students in the CPT program are only authorized to pursue an internship related to their major. They generally need to receive college credit for their work. Meanwhile, students in the OPT program are free to pursue an internship unrelated to their major and are able to take internships after they graduate. In both cases, the burden of getting authorized to work falls on the student and not the employer. However, as an employer, it would be wise to make sure a potential intern has successfully been authorized and approved to work.
There is always the possibility that student interns will become future employees. This makes targeting German students even more beneficial.
A friendly reminder: Be very careful when doing business-related activities in the U.S. without being incorporated in the U.S. Building a team without taking legal obligations into consideration will have disastrous effects on expansion efforts.