Human Resources & Payroll Blog

Should you be hiring unpaid interns this summer?

Jul 14, 2015 9:30:00 AM / by John Duval

internsAh, the unpaid summer internship. For many college students, it’s viewed as a rite of passage, a way to get valuable work experience on their resumes before graduation. In a competitive job market, most desirable employers have no trouble finding plenty of eager young people who’d be willing to work for free for a summer in the hopes that it will give them a leg up when the time comes to apply for their first jobs out of school

Even though there are plenty of studies indicating that having an unpaid internship on a resume gives college graduates no advantage when looking for post-college jobs, the potential for making the right connection is often enough to incentivize a young twenty-something to spend three months doing thankless tasks for 40 or more hours a week without a paycheck. 

As for employers, what could possibly be more appealing than the idea of free labor? Especially during a particularly busy time, it can be incredibly tempting to take on a workforce of unpaid young people instead of having to find room in the budget for the added payroll and hire new staff. 

But is this practice legal? That depends on a few things. 

If you’re in a non-profit or government organization, you have the green light to offer this kind of role. If you’re in the private sector, though, the answer to that question is a little more involved. 

While state laws may apply to create variations, as a general rule, employers should look at the six guidelines for internships in the Fair Labor Standards Act (emphasis mine): 

  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.

So to boil that down to its important points: if the internship is helpful to you in any way, you should pay. If it’s educational, unhelpful (or even inconvenient) for you, and the intern understands that they won’t be compensated, then you’re probably ok to proceed with an unpaid internship. 

If you take on unpaid interns and are outside one or more of these guidelines, you leave yourself open for lawsuits or run the risk of attracting the attention of government regulators. 

To be safe and increase the odds that your program will be viewed by all parties as an educational experience and not unpaid labor, here are a few clarifying points suggested by findlaw.com: 

  • The internship is structured around a classroom experience. 
  • The intern is provided with skills that can be applied to other employment settings.
  • The intern does not regularly perform the company's routine work, nor is the business dependent upon that individual's work product. 
  • The intern gets to shadow existing employees, and is only doing a minimum amount of work

Make sure that you as an employer have established a duration for the internship, and that you have not promised any permanent work at the end of the agreed-upon time. Referring to an internship as a “trial period” can send a mixed message and leave you open to legal action from the intern. Also be aware that if interns are filling gaps in personnel or are boosting staff numbers during a busy time, they should be paid. 

Essentially, if you’re benefitting in any way from having an intern around, you need to pay up.

When in doubt, it’s better to be safe than sorry. You have two options to protect yourself: 

Contact a lawyer and have them look over all the important details of your internship program, or 

Pay interns at least minimum wage, including overtime pay for any time worked over 40 hours per week. This is by far the safer option and is much more likely to protect you from any legal action or regulation. 

Given the precarious nature of compliance on this issue, it’s no wonder that much ink has been spilled declaring the unpaid internship an endangered species. While it’s not entirely impossible to legally hire interns without paying them, it may not be worth the risk or the hassle. 

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