Unpaid Internships

Unpaid internships are nonpaid, nonpermanent work experiences that enable an individual to participate in, and observe, a professional work environment. Intended to teach a young person about a particular industry, unpaid internships are commonly offered to students and others who are just setting out in their career, though there can be some debate as to when an intern should and shouldn't be paid.

What Is the Value?

Internships ought to offer interns substantial learning so they can obtain a greater understanding of a particular industrial sector, job role, and their own skillset. This has become a controversial topic in recent years, with some critiquing unpaid internships as a means for a company to exploit free labor while taking advantage of eager young workers who want to get on the career ladder, whereas others insist that these programs provide valuable experience.

The hiring rate for students is greater for those who participate in paid internships than those who accept an unpaid program. A study by the National Association of Colleges and Employers found that the hiring rate for students with paid internships is 63 percent, as compared to just 37 percent for those with unpaid programs. This is almost the same rate (35 percent) of those who did not participate in an internship in any form.

Intern's Rights

Anyone that is considering an internship should be sure to understand their rights as an intern before the placement begins. This way, they can avoid being taken advantage of, and their expectations are clear from the start.

The Department of Labor has set regulations in order to prevent any exploitation of interns, and these decide whether an internship should be paid. The Fair Labor Standards Act states that internships that qualify as paid positions must pay their interns the minimum wage (at least) for their assistance and services and paid for any overtime work.

Although an unpaid internship may improve a resume, it won't really do anything extra to help an individual to gain employment.

Six Criteria for Unpaid Internship

There are six points that an employer needs to confirm if an internship can be unpaid.

  • The internship offers similar training to that provided in an educational environment but in an actual workplace.
  • The program exists for the benefit of the intern.
  • The intern will work closely under the supervision of current staff, but doesn't fill the role of a regular employee.
  • The employer does not receive direct advantage from the intern's activities. In fact, employers may find that their operations are impeded.
  • The intern is not guaranteed a job when the internship ends.
  • Both the employer and interns understand that wages will not be paid to interns for their time within the program.

Opportunity Cost

Receiving minimum wage can be more sustainable than receiving no pay. The U.S. federal minimum wage is $7.25 an hour (slightly less in Georgia and Wyoming at $5.15 depending on the specific role). Though this is low, even minimum wage can go a long way for someone who needs money for college.

Cost of Living

According to Time magazine, the cities where most interns want to work are New York, San Francisco, and Los Angeles. Sadly, these are some of the most expensive cities to live in the U.S. People may choose to opt for a paid summer job rather than an internship as this way, they may still be responsible for the rent of temporary housing, but they will likely have more control over choosing a location that has a lower cost of living.

Total Cost

With all things considered, including the earnings that unpaid interns are not receiving, the amount that they have to spend living in expensive cities, and general cost of living, an unpaid internship could set someone back as much as $12,986. Though unpaid internships may lead to a job, as mentioned above, the chances of landing one after graduation is not higher with experience from an unpaid internship.

If you are considering hiring an intern, or you are concerned about whether an internship program that your business is offering qualifies as being unpaid, and you need further guidance then you can post your legal need on Upcounsel's marketplace. UpCounsel only accept the top 5% of lawyers to its site and they come from schools such as Harvard Law or Yale. Our lawyers have an average of 14 years of legal experience, and this includes working with prestigious companies like Google and Twilio.