Are Unpaid Internships Legal?

internshipsAccording to a recent article in The New York Times, officials in several states are concerned that in the current economy many companies are offering unpaid internships that are violating minimum wage laws. As a result, the Labor Department is more diligently investigating these practices and fining companies accordingly.

There was a time when the only people who sought out unpaid internships were students who wanted to gain valuable work experience and were willing to forgo a salary to get it. But in today's economy, more and more adults with long career histories are considering taking an unpaid internship as a way to get a foot in the door, transition into a new industry, learn a new job function, keep their resumes current, or update their skills.

According to Michael Casey, an employment and labor attorney for Epstein Becker & Green, "unpaid internships are on the rise for many reasons including the lack of available paid opportunities in the current economy and the fact that companies are stretched thin and unpaid interns are seen as a way to increase staff and productivity without increasing payroll spending."

But according to Mark J. Goldstein, a labor and employment attorney in Milwaukee, WI, the Department of Labor looks to six criteria that must be met in order that the unpaid internship not run afoul of wage and hour rules.

  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 institution.
  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.
  6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

Yet despite these criteria, not all companies seem to be aware of them. Casey suggests that many small businesses are unaware of the intricacies and consequences of unpaid internships and employers in good faith could allow interns to work for free and end up owing them back pay. Linda M. Duffy, HR Consultant and President of Leadership Haptitude recalls a recent scenario where a client wanted to "hire" an unpaid intern rather than an employee for a position as a network analyst. "There is no way that the job criteria for an unpaid intern would be met in this situation," says Duffy.

In other cases, employers may be aware of the federal rules, but choose to ignore them. Attorney Chloe Love of Cary & Lippincott, PLLC, claims unpaid internships are widespread in the fields of fashion, publishing, and journalism, while Casey says that law firms and public relations firms are also frequent violators.

Unpaid internships present other areas of gray. For example, as Duffy points out, "what happens if an unpaid intern gets hurt at work? Would the company's workers' compensation insurance cover the injury?"

The bottom line is that if you are considering taking an unpaid internship, proceed with caution and know your rights. If you are a current student or graduate of a college or university, talk to someone in the career services offices to learn more about appropriate internships or check out the internship resources available at the Vault.

Next:Five Internship Programs You'll Write Home About >>

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