3 Things You Should Know about Unpaid Internships

When I was in college – in the Olden Days, as my nine-year-old would say – internships did exist, but they were very different. First, they weren’t nearly as prevalent or seemingly necessary as they are today. Second, they were often obtained through a relative or a friend of a parent who worked in a certain field. Third, interns didn’t really do much. They mostly followed people around and observed. And last, there was no pay involved. If someone was getting paid, they had a “summer job,” not an internship.

The hottest topic regarding internships today is whether or not unpaid internships are legal. What was once the norm has become the subject of lawsuits across the country. Here are three facts you should know about unpaid internships.

Unpaid internships do still exist. A study done by the National Association of Colleges and Employers (NACE) found that 48% of students they polled had participated in an unpaid internship. And these unpaid internships weren’t all at non-profit organizations, about 38% of them were at for-profit companies.

They are not all illegal. Based on the number of lawsuits regarding unpaid internships that have been in the news lately, one might assume that all interns have to be paid. One of the most public cases involved Fox Searchlight Pictures and interns who worked during the production of the movie Black Swan. In June 2013, a New York federal judge ruled in the interns’ favor, saying they should have been paid because they were treated as employees. But if certain guidelines are followed by the hiring company, unpaid internships are perfectly acceptable.

These guidelines are part of the Fair Labor Standards Act, set forth by the U.S. Department of Labor. If a for-profit privately-held company does not want to pay an intern, they must meet these 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.

These criteria are meant to ensure that a company is not using an intern in place of an employee that would otherwise receive compensation.

There are even greater benefits to a paid internship than just a paycheck. According to the NACE study mentioned above, 37% of unpaid interns received were offered full-time positions, compared to 60% of paid interns. This discrepancy is hopefully at least partially a result of employers wanting to follow the Fair Labor Standards Act. Under “Job Entitlement” it states:

“…Further, unpaid internships generally should not be used by the employer as a trial period for individuals seeking employment at the conclusion of the internship period. If an intern is placed with the employer for a trial period with the expectation that he or she will then be hired on a permanent basis, that individual generally would be considered an employee under the FLSA.”

Many companies, including Legion Logistics, like to keep interns on as full-time employees after the internship is over if it’s a good fit. If this is the case, the intern should be compensated from the start.

So should you avoid an unpaid internship like the plague? Of course not. If an organization that you admire is offering you an opportunity to learn a wide range of skills from an incredible mentor, don’t turn it down strictly for financial reasons. But if you feel that you are being used as a second-rate employee and you aren’t receiving any educational benefit, you may want to talk to your school advisor or someone in your career services office about your situation.