Know the law before taking (or offering) unpaid internships

Know the law before taking (or offering) unpaid internships 800 800 Gordon Media Company

Internships provide valuable experience for students and young professionals seeking a greater understanding of an industry or occupation. They serve two purposes: helping students determine possible career options and teaching skills required for gainful employment.

Colleges and universities often require students to complete internships as part of their degree programs, which benefits students in the long run. Employers are more likely to hire a candidate with a 3.2 GPA and relevant professional experience than a candidate who offers nothing other than a perfect GPA. You may find that many employers don’t care about GPAs as long as you have a degree and experience.

Many students seek internships to gain professional experience, not expecting compensation from an employer. However, some employers take advantage of interns and exploit them for free labor. While paid internships are more desirable than unpaid ones, they are more competitive. So, before taking on an unpaid internship, it is essential for you to understand your rights so that you are not taking advantage of.

Unpaid interns in the nonprofit world

Nonprofit employers, according to the Fair Labor Standards Act (FLSA), must treat unpaid interns as volunteers who are donating their time to fulfill “public service, religious or humanitarian objectives.” The volunteer cannot be involved in any commercial activities, such as working in a gift shop, or else an employment relationship exists, and the intern is entitled to compensation as outlined by the FLSA. States may define volunteerism somewhat differently than the U.S. Department of Labor, so these laws are worth exploring a bit more.

A test for for-profit employers

“Volunteers” are not legal for for-profit private sector employers. For a for-profit private sector employer to have unpaid interns that are exempt from FLSA, they must meet all of the following six criteria:

  1. The internship, even though it includes the actual operation of the facilities of the employer, is similar to the training 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 the 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 be impeded;
  5. The intern is not necessarily entitled to a job after 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 these criteria are not met, an employment relationship exists and the intern must be paid at least minimum wage—plus overtime for work hours exceeding 40 in a week.

Internships are intended to be educational. The Department of Labor says that they should teach skills useful in “multiple employment settings.” If the work is unpaid, the intern cannot be involved in the business’ operations or perform duties from which the employer receives a direct benefit. Companies may not use unpaid interns as substitutes for hiring actual employees.

Rather than have the close supervision an employee would receive, unpaid interns are expected to observe, shadow and receive first-hand training. If the intern falls under the control an employee receives, an employment relationship exists, and the employer may have to pay up.

Lastly, an employer cannot use internships as trial periods for determining whether or not to hire the worker as an employee.

In recent years, there has been a surge of former interns suing companies for unpaid and underpaid work. In 2014, Condé Nast settled a $5.8 million class-action suit covering nearly 7,500 interns and subsequently terminated their internship program. Hollywood studios were also sued, with most now agreeing to pay interns.

Unpaid internships are acceptable if they adhere to state and Department of Labor laws. Before starting your internship, be sure to have everything in writing, including your responsibilities and the employer’s expectations. Also, you should have in writing definitive start and end dates, which can help you avoid falling victim to bad internship practices.

This is article is not to be considered legal advice, but educational information for those with interest. Consult an attorney for legal advice.