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The Debate Over Unpaid Internships

Last week the New York Times ran an article about the legality of unpaid internships. The story claims unpaid internships at for-profit employers are on the rise and are often illegal.

In order to comply with federal law, unpaid internships at for-profit employers must meet six criteria:

1. The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;
2. The training is for the benefit of the trainees;
3. The trainees do not displace regular employees, but work under their close observation;
4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
5. The trainees are not necessarily entitled to a job at the conclusion of the training period; and
6. The employer and the trainees understand that the trainees are not entitled to
wages for the time spent in training.

Meeting these six criteria means an intern is a “trainee” instead of an “employee” and minimum wage and overtime provisions of the Fair Labor Standards Act do not apply.

Nancy J. Leppink, the acting director of the U.S. Department of Labor Wage and Hour Division, stated: “If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law.”

It is rare to find an employer that does not benefit in some way from an intern.  Whether it’s the immediate benefit from the work a student completes during his/her internship or the long-term benefits of converting interns to full-time staff, most companies are willing to take on an intern because it helps their bottom line.

Recognizing this, most for-profit employers pay their interns, with the exception of some industries in which competition is fierce and jobs are scarce (film, music, sports and other entertainment industries, for example). The “payment” in these industries is exposure, networking opportunities and the rare opportunity to gain insider access into industries that are notoriously difficult to get a foot in the door.

I understand the value of those things, but I think not paying students working in those industries is ridiculous. From what I can tell, there are a lot of people making a lot of money in many of these industries. Seems to me it wouldn’t be that difficult to fork over (at least) minimum wage for a student who desperately wants to gain experience and works extremely hard to do so.

In addition, as the article points out, unpaid internships can disadvantage low and middle income students who cannot afford to take an unpaid position. This is unfortunate, because by limiting pay an employer is also limiting the pool of talent from which they can select an intern. Employers who do not pay their interns because demand is so high they don’t have to are, in effect, maintaining an employment system that unfairly disadvantages those from lower incomes and less connected backgrounds.

Yet, given the inequity of unpaid internships, I still encourage students who are trying to establish their personal brand to seek out whatever experience they can. This might mean working for free, in some way. Employers offering unpaid internships should at least be flexible with work hours so that students who need to work can find a paying gig on the side.

I‘m curious what students think about this article. Does your dream internship have to be paid? Have you had an internship in which the employer took advantage of you because you weren’t considered a “real” employee? Have you had an unpaid internship for which you had to make sacrifices to make it work? Have you not applied for certain internships because you needed to earn money to pay for your education?

For-profit employers who don’t pay your interns – is there something I’m missing here? Tell me what’s up with that.

Let’s discuss.

Author:

Kelly is a career advisor at the University of Wisconsin-Madison, where she assists undergraduate business students with all aspects of their career development. Connect with Kelly on Twitter, her blog, LinkedIn or BrazenCareerist.

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8 Responses to “The Debate Over Unpaid Internships”

  1. avatar Greg de Lima says:

    Kelly, another phenomenal post!
    For me, when you mention that unpaid internships affect middle class students, you’re 100% correct. It’s tough for middle class especially helping my parents pay bill, or at least cover my own expenses.
    When I got news about this article from NYT I was ecstatic, the question is, these are laws that were already in place, why did it take so long for someone to notice and do something about it?

    • avatar Kelly Cuene says:

      These laws might be difficult to enforce if interns don’t want to come forward, fearing they jeopardize their future opportunities. I can understand their hesitation.

      There seems to be this mentality that experience is “payment” enough, but it’s tough to justify to parents why you should barely break even or even lose money over a summer when you could be working for pay. A lot of students who receive financial assistance from their parents feel like they should be doing their part to contribute by earning some money themselves (I know I felt that way). Tough to do that when you’re not getting paid.

      Thanks for your input, Greg!

  2. Great thoughts here Kelly. I would agree that unpaid internships are often confinded to industries that can certainly afford to pay a student some kind of stipend. As a former college career center professional, many of my students would obviously shy away from such opportunities – and I’d often get calls from employers asking “why?” Employers often felt the giving students the opportunity was more than “enough” pay. Part of the issue was educating employers on what constitutes a good internship program. Often times, they’re creating one on the fly without any guidelines to direct them either way.

    • avatar Kelly Cuene says:

      Thanks, Miguel. Have you seen Heather Huhman’s post on this issue? She has some great ideas about how the FLSA criteria can be revised to be more specific about who can offer unpaid internships and under what circumstances. I also like her idea of changing criteria #4 to require interns to benefit as much or more than an employer – that seems more realistic. Here’s the post: http://www.heatherhuhman.com/2010/04/unpaid-internships-the-fair-labor-standards-act-doesnt-go-far-enough/

      The point you make about educating employers about what constitutes an educational internship experience is an important one. A lot of career centers can assist in this regard. I’ve worked with many employers that have, fortunately, reached out to the career center when designing or updating an internship program to get feedback about this. That’s great for the student, but also benefits the employer – the likelihood of the intern wanting to stay on full-time (if that’s a possibility) or spreading a positive message about that organization will definitely increase as a result of the employer’s efforts.

      Thanks for your thoughts!

  3. avatar Erin Seay says:

    Hi Kelly,
    Great post! I have a couple of comments to add. When I was in college, I couldn’t afford to do unpaid internships because I was paying for school and my living expenses. I really felt like I was at a disadvantage when I graduated because I couldn’t do the free internships and missed out on great experience and networking. That being said, I;m currently unemployed and am wrapping up my 3rd unpaid internship. With the job market being so bad, I’ve taken this opportunity to learn anything people will teach me and used internships to build my resume, fill in the gap of unemployment in my resume and network. Because of my unpaid internships, I’ve meet some amazing people, worked with astronauts and now have a large network of people helping me find work. I was never taken advantage of during an internship and I really recommend more unemployed people doing them.It’s valuable experience and networking.

  4. avatar Cody Swann says:

    Great post, Kelly.

    The debate over unpaid internships seems to be the same, albeit less politically charged, as the debate over child labor laws and minimum wage.

    On the one hand, it may seem unfair to work for free, but as you point out, it’s still a good idea sometimes.

    Same with minimum wage. Can we just let supply and demand work it out?

    Meaning, if unpaid internships are such a problem, won’t students stop seeking them?

    The interesting addition to the internship argument is this. Internships are unequally beneficial. Meaning a rich student with connections can afford to turn down unpaid while a student who is paying their way through school may not be able to afford to work for free, thus the rich get richer so to speak.

  5. avatar Nicolette says:

    This subject is close to my heart, because I once did one of these and I can tell you that it’s extremely hard, especially if you end up interning with someone who doesn’t show an ounce of gratitude or reward you in any way- obviously you’re unpaid, but still. You work to the bone, maybe even as hard as other employees, it’s frustrating!!! I hated it!

  6. Interesting post! California and Oregon are right to investigate employers for leveraging the internship model as a vehicle for exploitative, unpaid labor.
    Internships are, by definition, experiential learning. A student working at an “internship” where he or she does only unpaid grunt-work is a clear victim of exploitation. Furthermore, we must recognize that student willingness to take on such a role is not sufficient ethical justification. If students have no other way to get into their industry of interest and they can afford to go unpaid, then of course they are going to accept the position (valuable learning experience or not). For this reason, certain, more selective industries are able to reap profit and still have unpaid interns doing little more than fetching coffee and wiping door handles. Ultimately, access to an industry is not the same thing as a learning experience.

    While it’s clear that unpaid grunt work should not and cannot be masqueraded as internship opportunities, there are circumstances where students derive enormous value from real internships in terms of new skills learned, applied education, networking, developing comfort in a job environment, and industry experience. When such substantive internships are paid, they are no-brainer opportunities.

    Here is a list of suggestions that may help drive the conversation forward:

    1. Time Commitment: Consider instituting a maximum number of hours (e.g. 15/week) beyond which an unpaid intern cannot be asked to work. The objective here is to allow students who must work for pay to be able to balance a part-time unpaid internship with a part-time paying job.

    2. College Compensation: Some colleges and universities have started offering stipends to students who do internships (particularly in the nonprofit arena). In addition to stipends, college students need to standardize and make more easily accessible their requirements for receiving college credit in return for educational experiences applied in the real world.
    3. Government Compensation: Companies should recruit more students who are eligible for The Federal Work-Study Program, which reimburse employers for a substantial portion or even a majority of wages paid to an intern. In turn, students should be proactive in requesting that employers fill out the minimal paperwork and, if necessary, should connect the employer with the University’s Career Services to work out the details. The Part-Time AmeriCorps Program (via Campus Compact) in Washington State also provides substantial tuition breaks for students that complete nonprofit internships. We should encourage the expansion of such programs and educate both students and employers on the benefits.

    4. Access to Opportunities: Students (and future hiring employers) need to think in terms of gaining real experience and building a portfolio rather than putting a name-brand company onto their resumes. Students should explore opportunities at smaller businesses and nonprofits where they get more access to decision-makers and a chance to really engage in the heart of the business. Steven Greenhouse of the New York Times is exactly right in stating that many students lack the uncle or golf buddy with the right connection at a prestigious firm.

    5. Employer Education: I firmly believe that an employer that pays is much more likely to have satisfied interns that speak highly of the experience and become evangelists for the organization. Employers need to be made aware of the benefits of paying interns.

    Perhaps above all, students and employers need to be educated on the different options for tangible intern compensation. These resources need to be more easily accessible and less convoluted than they are today.
    With the vast majority of students engaging in at least one internship while in college, it’s clear that we need to create a system that treats students fairly and where there is a win for both sides.
    Andrew Maguire
    CEO
    InternMatch

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