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Is Your Unpaid Internship Illegal?

This article was written by in Career and Work. 11 comments.

In certain fields, internships allow younger people in the formative stages of their careers get experience with major companies, make connections with influential people in later stages of their careers, figure out if their career goals are worth the effort, and possibly put themselves in a position to be hired full-time for the company that offers the internship.

For companies, internships are nothing more than a way to receive cheap labor. Corporations can churn through hundreds of eager, doe-eyed interns a year, offering none of the promised benefits, except perhaps college credit.

Your internship may in fact be illegal, according to the Department of Labor. An internship is still a job — you are working, offering time and effort, usually at high capacity even if the skills you may need aren’t necessarily technical at this stage. And because you are working, you should be paid a market wage, though there is some concession that if you’re receiving the benefits described above, society is willing to accept lower wages.

I studied music education in college — far enough away from what I do for a living now — but one of the things I did in my role as education officer for a national service organization was arrange for one of the professors to speak about practical issues musicians face when entering the work force.

One of his points was never to perform for free. There will be a lot of pressure for musicians to build a reputation for themselves as performers, and others will offer performance opportunities in return for “exposure” or as an “audition for a full-time gig.” Accepting these types of opportunities reduces the value of live musical performance in the economy. Why pay an experienced, professional musician, when an eager graduate will provide a similar service for free?

This corresponds to labor forces in the world of non-musicians, and the Department of Labor, as a result of the Fair Labor Standards Act, has certain regulations that are supposed to prevent for-profit employers from taking advantage of desperate individuals eager for any chance to prove their worth to any company that will pretend to pay attention.

If you have accepted an unpaid internship, these are the six criteria, all of which must be met, in order for your employer to be following the law:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

I find the fourth criterion most interesting. In a for-profit company I’ve worked for in the financial sector, my department hired summer interns during my last year at the company. Interns were clearly present to assist the department with administrative needs. Does that provide an immediate advantage to the company? I think it does, because it allows other employees to focus on higher-level tasks.

In this case, the internships did not displace existing employees, but a hired administrative assistant — or even a temporary worker — would have been able to provide the same type of labor, both at market wages.

How the company I worked for was able to avoid any problem was by paying the interns some kind of minimal stipend. I don’t know how much it was, but it wouldn’t have been a minimum or living wage. Offering any sort of compensation negates the need for the position to meet all six criteria, even if the compensation is a token payment. In fact, some companies will pay their interns a token amount simply to avoid the regulation.

That’s a great deal for the employer, and not a good deal for the employee who loses protection under this particular law without still needing other work to supplement the internship. This other work might constitute another full-time job just to cover all basic living expenses, and the result is a generation of young individuals working eighty hours a week — or more, because interns are often pressured to prove their worth by exceeding expectations of time and effort — if they want a full-time salary.

Unpaid internships rarely offer the benefits promised. The best internships, those that actually introduce young workers to people who can guide them in the right direction, are often paid internships. The companies that offer them want to attract the best interns, and the best way to do that is to offer compensation. As more aspiring employees choose paid internships in every field, the less society will accept unpaid internships.

Every worker should be paid fairly for the work they do, and the more companies successfully take advantage of those most desperate for work in the early stages of their careers, the less power all workers will have in negotiations. The important point for me is not giving employees more power than employers, just striking some kind of balance so that, among other things, young workers are not led to believe that working for free is a good way to build a career.

What I would like to see, though, is all unpaid internships in the for-profit sector being illegal. There is no reason people should be expected to work without real compensation that one can use to pay real living expenses. The laws of supply and demand won’t necessarily agree with that approach until everyone demands fair compensation; until then, regulation would be necessary.

Did you start your career with an internship, whether paid or unpaid? Did you receive the expected benefits, and was it worthwhile?

Photo: Flickr/vernieman

Updated August 22, 2013 and originally published August 19, 2013.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 11 comments… read them below or add one }

avatar 1 Anonymous

Not just no. Hell no. No one is FORCING an intern to show up and work for nothing.

The experience and professional references that come from the work ARE the pay. If you don’t like it, don’t do it. If enough folks said no, there’d be no more free interns. Clearly though, there are folks willing to bite the bullet.

Regarding Point 4 – you could say that even if the intern’s work is helping the company, the extra time spent training them and reviewing what they do is reducing productivity.

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avatar 2 Anonymous

I’ve always thought that unpaid internships were a pretty sad thing. Of course people should be paid to work. We have a legal minimum wage and I don’t see how simply calling someone an intern should get around that. Its a reflection of the job market realities for many fields that employers cna even get away with not paying. You don’t see engineers doing unpaid internships.

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avatar 3 Anonymous

I think that colleges also play into this as well. When I was in college, I was required to take an internship in order to graduate. Since my majors were in the social sciences, I ended up taking an unpaid internship with a non-profit runaway shelter (social sciences don’t typically offer paid internships since most are non-profit). To add insult to injury, I also had to take the internship for no credit, as if I wanted to take the take the internship for credit (and have it therefore show up on my college transcript), I would have had to pay my college for those credits.

So it basically boiled down to this: take the unpaid internship, or don’t graduate. I opted to graduate.

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avatar 4 Ceecee

It just seems wrong. I did an internship in college for a professor. I graded essays. I got a small stipend. In those desperate days, anything helped, but a real wage would have helped even more. I agree with what you say about item #4, it’s impossible to believe that companies don’t derive a benefit from the interns……just sayin’.

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avatar 5 Anonymous

What ever happened to the free market?

If I want value work experience so much that I’m willing to work for free in exchange for the experience, and a company is willing to give me that experience, why does the government need to be involved?

When two parties come to a mutually beneficial agreement without any coercion, if the government steps in and prevents it then we are all worse off. The individual can’t get experience, the company doesn’t get the work done, and this ripples throughout the entire economy. Now that person has no experience and maybe they can’t get a job, so they go on welfare and other forms of government assistance. We all pay higher taxes to support this person who could have had the experience needed to get a job if the government didn’t step in the way.

Nobody is forcing anyone to take an unpaid internship. However, it is stupid for the government to prevent it for those who are willing to do it.

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avatar 6 Luke Landes

From an economic perspective, child labor, unsafe working conditions, and an unhealthy number of working hours per week are all normal consequences of free market conditions, in which households with desperate needs are willing to sacrifice everything else in order to work. What ever happened to those good old days, when large companies were free to take advantage of their neediest workers? Child labor, unsafe working conditions, too many hours, etc. — these were all considered “mutually beneficial” because the desperate would accept whatever necessary to feed their families. Conditions today aren’t as extreme, I’ll grant that, but the “free market” doesn’t provides and has never provided balance between corporation and worker.

Now, if what you were saying where true, industries that do not normally rely on unpaid internships would suffer from a lack of points of entry for young workers. That’s not the case. There are entry level positions in those fields that meet the needs of on-the-job training, introduction to a career or a company, etc., all with some type of wage or salary that is at least the minimum wage. Unpaid internships do not fulfill a need in the marketplace other than for companies to save money on human resources. Saving money is a good thing for business owners, stockholders, executives, etc., and that’s generally good for the economy, but a business plan that relies on taking advantage of employees is not a good business plan.

In short, people were willing to work in unsafe conditions in factories, willing to put their children under the age of ten to work, and willing to work 100 hours per week without overtime pay if it meant their family would have a chance to afford food for another week. The free market is fine with that. That doesn’t mean the government should allow those conditions to continue.

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avatar 7 Anonymous

I’ll quote you here: “Unpaid internships do not fulfill a need in the marketplace other than for companies to save money on human resources. Saving money is a good thing for business owners, stockholders, executives, etc., and that’s generally good for the economy, but a business plan that relies on taking advantage of employees is not a good business plan.”

If this is the case, how would you differentiate “unpaid internships” from “volunteer opportunities”? I know of a situation where a for-profit corporation is putting on an event and soliciting numerous unpaid volunteers to assist in the preparations and execution of said event. These volunteers are happy to work without compensation for any number of reasons, including wanting to learn something, wanting to be helpful, and maybe wanting to promote themselves or their own personal businesses at the event. To me it seems like the corporation is getting what it wants (help to put on the event) and the volunteers are getting what they want (any number of reasons why they freely choose to participate). However, based on what you’ve written here it seems like this company may be acting illegally and should be required by law to pay at least minimum wage for every hour someone works on the event?

I’m having a hard time finding a difference between “volunteer opportunities” and “unpaid internships” when both are being offered by a for-profit corporation. Thoughts?

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avatar 8 Luke Landes

It’s funny that you mention that. I see where you’re going with this. I think we both agree that non-profits are different entities, and what we’re discussing might not apply. I didn’t address that in the article, because it probably deserves a separate discussion.

I think I know what you’re getting at with the situation you’re speaking of — while the event, or at least the event’s website, is technically “owned” by a for-profit company, that company has little involvement and is not providing resources, including funding. It’s a personal project, community-focused, and it has lost money over the past several years. It has more in common with a non-profit, not because it doesn’t profit, but because it is a community-focused endeavor, with contributions from all areas of the community, and with a mission. Regardless, I am doing what I can to try to compensate those putting in the most effort in some key roles, even if it must come out of my own pocket (which it probably will).

Now to generalize, for-profit companies often ask their employees to “volunteer” at company-sponsored events — but in my experience, they are still paid. Employees should still be paid regardless if they’re working for the company with their primary responsibilities or if they’re helping out at a company-wide event. I’ve never heard of a for-profit company going out to the public to solicit volunteers unless the for-profit company has a “foundation” arm or some kind of non-profit subsidiary. And even then, volunteers are rare when employees abound.

I see “volunteer opportunities” as things generally offered by non-profits, short-term opportunities that have nothing to do with specific skills in an industry, and “unpaid internships” as positions that for-profits offer, designed to give young individuals career-specific experience and connections.

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avatar 9 Anonymous

So you are saying that the fact it is a community focused endeavor with a mission that just happens to be run by a for-profit company, so that means people should be allowed to volunteer for it without pay?

If you truly believe in your industry, then you could classify about almost any for-profit business as something that is community focused and has a mission. For example, banking (an industry that gets a lot of flack from government officials as well as consumers) can be considered a community focused endeavor (providing financial services and loans to people in the community) with a mission (help people meet their financial needs).

I do want to be clear that I think you’re doing a great job with the event we are referring to and I think the volunteers are happy to help without pay (or else they wouldn’t be doing it).

I just think the same courtesy should be extended to anyone who is so motivated to be a part of an industry that he or she would be willing to do work (an internship) without pay to be a part of the industry, meet contacts (it’s all about who you know), and gain experience for his or her resume.

avatar 10 Anonymous

Interestingly, it seems less likely to lead to abuse if the work is done for no pay. A desperate person trying to put food on the table might accept an “internship” that pays below minimum wage; but if the position pays zero, then only those who freely choose to donate their time will pursue it.

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avatar 11 Anonymous

It’s sad how companies try to exploit anything they get their hands on. And the same goes for internship. Once they found that they can get some labor for a really low price or at worst cases for free, they will surely plunge into the idea. They might even create the illusion that it is for the intern’s welfare when really it is not.

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