If you think it is good business to hire unpaid interns, think again.
By Allyson Kurker
January 10, 2013
Many of us grew up working as unpaid interns. Having “intern” listed on a resume was perceived to be a great way to distinguish oneself from the competition. It wasn’t so bad for the business either. The employer built good will by giving an invaluable learning opportunity to a job seeker in need, not to mention getting some work done for free.
The paradigm I’ve just described, however, is a relic of the past. Today it is very difficult to legally hire an unpaid intern. This may seem nonsensical, particularly in this economy where thousands of unemployed workers would relish the opportunity to obtain on-the-job experience and avoid resume gaps. Nonetheless, both state and federal law prohibit unpaid internships except in limited circumstances.
Legally, the word “employee” means anyone who provides services for an employer. And most employees must be paid at least minimum wage and time and a half for hours worked in excess of 40 per week. The exceptions that put a worker into the category of “intern” rather than “employee” exist only if the worker is providing services to fulfill an educational or training program requirement, for a charity, or for a public-sector employer. The focus of this column is on the educational requirement, because IT service companies are neither charities nor in the public sector.
THE EDUCATIONAL EXEMPTION
The key to using the educational exemption is that the internship experience must provide an educational or training benefit. For example, before sitting for the electrician’s licensing exam, an electrical student must fulfill a certain number of on-the-job training hours. This work can be performed for free. Or, a private employer could hire a college student as an unpaid intern if the intern were obtaining college credit for participating in the internship.
Simply calling an internship “educational,” however, will not make it so. If you want to offer an unpaid internship under the education exception, you must meet each of the following six criteria:
- The training is primarily for the benefit of the intern, not the employer.
- The intern does not do the work of paid employees, but rather receives regular supervision by at least one staff member.
- Both employer and intern understand that the internship is unpaid.
- The employer does not immediately benefit from the intern’s work.
- The intern is not necessarily guaranteed a job at the end of the internship.
- The internship takes place in an educational environment.
These criteria are meant to prohibit an employer from “hiring” an intern to perform the duties that the company otherwise would pay an employee to do. If a company hires employees to troubleshoot and resolve network problems, for example, it cannot hire interns to do that same job for free, even if the intern would learn from the experience.
It is also important to note that an employee’s right to minimum wage and overtime cannot be waived. An employer cannot contract around the wage and law provisions even if the employee would be willing to do so. Thus, if an employer violates an employee’s right to compensation, no matter the lack of understanding or good intentions, by law the employee is entitled to triple damages (what the employer should have paid the employee multiplied by three), plus attorney’s fees and costs.