As reported by the U.S. Department of Labor in April 2010, internships in the for-profit private sector are most times viewed as employment and, therefore, compensation must be given unless they meet all criteria of a test relating to trainees. The applicable test for determining if an intern is receiving training for their own educational benefit must meet the following six criteria:
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.
If all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the Act’s minimum wage and overtime provisions do not apply to the intern.
Many for-profit companies in the private sector have navigated around the need to compensate certain interns because colleges and institutions give student interns school credit in exchange for the hours worked at these companies. Despite this trend that lasted for years, some institutions, such as Columbia University, are now no longer offering its undergraduates registration credits in exchange for internship experience. “There is no doubt that internships can be valuable experiences for students seeking an introduction to a range of careers and professional cultures,” Dean of Academic Kathryn Yatrakis wrote in a campus email obtained by Newsweek. “However, we expect companies to appropriately compensate students for work performed during internships.”
InternMatch, an online platform that helps students find internships and companies hire talented students has published their opinions on unpaid internships, which ultimately led to the establishment of this service for students seeking paid opportunities. According to InternMatch:
• Unpaid internships hurt the economy. The millions of unpaid internships in the U.S. every year are costing hundreds of thousands of jobs. Paid internships turn into a job 60 percent of the time, whereas unpaid internship experience offers a measly 1 percent bump over no internship experience at all (37 percent vs. 36 percent). The data-supported realization that unpaid internships have only a 1 percent impact on employment should sound an alarm for everyone defending the “pay your dues and you’ll be better off long-term” argument.
• Unpaid internship programs open the door to discrimination. Labor groups have fought hard over the last 100+ years to protect workers from discrimination in both the hiring process and on the job — but unpaid interns have no legal recourse when it comes to sexual harassment or discrimination on the job because they aren’t actually employees.
• There is a real need for a nationwide intern bill of rights. InternMatch has been ahead of the curve and actually started an Intern Bill of Rights last year — and companies like Rosetta and Viacom have already signed on. Check it out here.
Interns actually rank financial compensation last in terms of most valuable perks, according to recent data in InternMatch’s 2013 State of the Internship report — so, while interns certainly need to be paid, they don’t need a huge salary. Instead, InternMatch’s data suggests interns care more about gaining experience and building a portfolio, flexible work arrangements, and office pets.
During my tenures in college and law school, I participated in both paid and unpaid internships. My alma mater, Florida A&M University, School of Business & Industry made certain that all of our internships not only paid, but paid well. Additionally in law school, I took both paid and unpaid internships, with the unpaid opportunities being in the fields that I was actually more interested in. Real estate law opportunities paid well, entertainment law opportunities paid nothing. Either the solo practitioner I was interning for did not have the funds to pay me, or it was just “standard” that all interns for entertainment based companies to accept unpaid positions to get their foot in the door. I ultimately parlayed one of those unpaid opportunities into a paid position, which may not have happened if I didn’t accept what was “normal” at the time.
I see both pros and cons to internships being offered without pay, or only for school credit. However, as many companies tend to benefit from the ideas and work of students who may not be able to buy lunch, is it ultimately fair to both the students and the institutions to continue to work for “free”?