The End of Internships?

Federal and state governments have begun to crackdown on unpaid internships, which they say violate minimum wage laws. The U.S. Labor Department claims to be targeting firms that fail to pay interns properly, and to be increasing efforts to educate firms, colleges and students on compliance with labor laws.  According to a fact sheet released by the U.S. wage and hour division, some for-profit entities may engage the services of unpaid interns as long as they comply with 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.

Source: U.S. Department of Labor Wage and Hour Division

Employers who wish to hire unpaid interns should be cognizant of these six criteria.  An unpaid intern may file complaints regarding an employers’ lack of compliance with such criteria, although he or she may be reluctant to do so for fear of affecting his or her post-graduation employment options.  Some firms have had to pay thousands of dollars to unpaid interns in back wages.  Also, employers should ensure that the actual duties of an unpaid intern are sufficiently educational.  Some colleges’ offices of career services refuse to post advertisements for unpaid internships if, upon further investigation, it is uncovered that the internship consists solely of menial tasks.

Critics of unpaid internships also argue that they favor affluent students who can afford to forgo a salary during their summer vacations. The existence of such internships may make it more difficult for less affluent students to get a foot in the door in highly competitive industries, such as music, art and entertainment.

Non-profit organizations, unlike for-profit businesses, may not be subject to as strict rules regarding unpaid internships since individuals often volunteer for such organizations. Some states, however, may require that the recipient of an unpaid internship receive educational credit for the internship.

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