In general, unpaid interns have the same legal rights as your employees. They may not be discriminated against because of race, gender, religion or national origin; they have a right to request reasonable accommodation under the Americans With Disabilities Act; and they may seek damages if they experience sexual, racial or ethnic harassment. It's best to cover them for workers' compensation, too, because if they're injured on the job and not covered, they can sue your business for medical expenses and possibly for negligence, which can subject your business to unlimited damages.
Because of the temporary nature of a student internship, though, you don't have to pay unemployment compensation premiums for interns. Nor do you need to go through the usual termination procedures if the student isn't working out; a simple explanation to the student and the school will suffice.
Even if students eagerly offer to work without pay and sign a contract waiving their right to the minimum wage, the Labor Department may insist they be paid anyway if their efforts benefit your business. So if your goal is cheap labor, better pay minimum wage. But if you'd really like to help students learn while you test-drive some potential employees, call your local college about a genuine internship.
Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.