Your Unpaid Internship Might Be Illegal!

If you have decided that you will be hiring interns for the summer, the next step is deciding whether or not you want to have a paid or unpaid internship program. Unpaid internships were the norm back in the day, but they have become increasingly rare. While the war for talent (even student talent) may be part of the reason companies have upped the ante, the rules and regulations put in place around unpaid internships may have also played a role in the transition.

Think Interns = Free Labor? Not So Fast: Know Your Internship Program Regulations

While an unpaid internship may sound appealing to the budget, there are guidelines laid out through the Federal Labor Laws that must be followed for the unpaid internship to be legal. I have summarized them below:

  • The training should be similar to what they would receive at a vocational school: This means that the experience students get from the internship should be tailored more closely to their education than toward the employers’ operations. For instance, if the student is studying marketing, every project they work on should be designed to enhance their marketing skills regardless of whether or not the project is top priority for the company.
  • The training is for the benefit of the student: The student should not be doing productive work for the company that would not benefit him or her. This benefit needs to be more than “learning a new skill” or “professional experience”.
  • The student does not replace a regular employee: You cannot use an intern to cut your overhead costs.
  • The employer derives no immediate advantage from the activities of the student and may even be impeded: This may be the most important one. Any efforts that the student makes must be offset by the impediments the company incurs through training and supervising the intern. If an intern is working independently to complete projects that will benefit the company, they must be paid.
  • The student is not entitled to a job at the conclusion of the internship: If there is any chance that an intern could be offered a job at the end of the internship, you must pay them.
  • Both the employer and student understand that this role will not be compensated.

In general, if you are unsure whether your program meets the guidelines, pay the intern. Internship pay ranges anywhere from $10-$20 per hour depending on location, the company, the industry, and the job function.
When considering an unpaid internship it is best to consult with a lawyer to ensure you are following the regulations and will not be hit with any surprise lawsuits.

Senior Talent Manager, Engineering
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