If you have unpaid interns, or you pay your interns but it’s less than minimum wage, there’s a good chance that your interns could sue you. While companies have known this for years (or should have known this), they assumed that no intern would call them out on it. Well the recent rash of internship lawsuits has broken the proverbial levee, and some are predicting that a flood’s a-comin.’ (After all, according to National Association of Colleges and Employers, roughly half of all internships for the past three years were unpaid.)
If you don’t believe me and want proof, it’s actually pretty easy to find it. The Department of Labor has a six-rule test, originally established in response to a Supreme Court case about railroad trainees, to see if your unpaid internship practices are illegal. Your internships must satisfy all six of these rules:
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.
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
So, basically, an unpaid internship must be 100% to educate and benefit said intern, not the employer. If they’re doing work typically done by “regular” workers or are assigned mundane tasks, that should send up a red flag.
These items came as news to me up until about six years ago. Before then all my experience was on the intern end. During college I undertook two internships (on top of part-time jobs) – pretty standard for young professionals today – and the majority of my friends/cohorts did the same. When I think back on all our experiences, I can count the number of “legal” unpaid internships on one hand.
As interns we were exposed to a lot and learned some new tricks, plus got the chance to see what it would be like to work there, but ultimately a lot of our time was spent on low-level tasks. I didn’t think anything of it at the time; my friends were doing the same thing, so I just assumed that was the norm.
Fast-forward a few years and I landed a promotion that called for me to supervise about a dozen interns annually. The expectations for the interns were about the same as what I expected based on my own experiences. And then I found out about the aforementioned rules.
I alerted my boss to this, and it was quite the conundrum. Sure we used interns as a way to scout potential future hires, but we were in the middle of a recession so the main reason we needed them was to assist in the day-to-day operation of the company. With that in mind, we had just three options: pay them, get them course credit, or become a non-profit (they get a proverbial “free pass” because they’re considered volunteers).
At the time, we got away with the course credit option, but according to the National Association of Colleges and Employers, many top schools no longer trade internships for academic credit. Paying them, often minimum wage or slightly above, seems to be where many companies are moving. NY Creative Interns, an enormous meetup group for interns and recent grads, has reported recently that the frequency of paid internship positions has risen 500%.
So if, like me, you realize that your internship practices are illegal according to the DOL, you might want to make the move to paying them. Just think of it like you’re hiring a temp, with the possibility of perm placement after their three- or four-month stint.