There’s No Such Thing as an Unpaid Intern

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Awesome internship dude

In a town like Austin, Texas that’s virtually crawling with college students, it seems like it would be a piece of cake to establish an unpaid internship program. After all, all those kids need some real world experience. As it turns out, you had better be prepared to pay, either with your time and attention or with cold, hard cash, unless you’re looking for a visit from the U.S. Department of Labor.

In recent years, the DOL has cracked down on the unpaid intern racket, trying to protect college students from exploitive employers who bring on “interns” but the closest they get to learning the business is how to run the copy machine. These days, if you want to hire an intern without paying money, you must be prepared to demonstrate that you’re serious about offering valuable work experience. To do that, you have to meet the following six criteria, or be found in noncompliance with the Fair Labor Standards Act.

  1. The internship has to be similar to training the intern would receive in an educational environment.
  2. The internship experience is for the benefit of the intern.
  3. The intern doesn’t displace regular employees but works under close supervision of the staff.
  4. The employer who provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded. (Read: It’s a learning process for the intern even if it’s slow and messy.)
  5. The intern is not necessarily entitled to a job at the conclusion of the internship
  6. Both employer and intern understand the intern will not earn wages during the internship.

At ValentineHR, we’ve seen some really interesting interpretations of the intern concept. Like, if you’ve got a marketing intern—or hr, computer science, financial services or almost any other kind of intern–having her do data entry isn’t really teaching her the business. It’s clearly replacing a paid employee and it’s pretty obviously more for the benefit of the employer than the intern.

Many universities require companies to be vetted before they’ll send their students to work for the company. Sometimes the business has to prove that it is providing an educational experience for students AND pay them before a college will give credit for the internship.

Having a serious internship program doesn’t mean having a student post on Facebook and Twitter. Do you really want your social media campaign run by a student, anyway? It means creating a thoughtful, well planned, developed program in which interns are supervised and taught.

And what does a sloppy internship program mean?  How about legal problems involving discrimination,  workers’ compensation, state and federal taxes, benefits and unemployment insurance coverage.

In other words, something that costs a lot more than minimum wage.


Department of Labor Wage and Hour Division Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act

We work with companies on a project basis or on retainer, providing a custom level of HR help designed for your business, with offices in Austin, San Antonio, Dallas and Houston. Contact me at Caroline@valentinehr.com or call (512) 420-8267.