Should Unpaid Internships Exist?



Are Unpaid Internships Ever OK? Silicon Valley Workforce Expert Says It’s Not Worth The Risk

Samantha Drake, Forbes Contributor


Internships have become a significant part of college for many students, giving them practical, real-world experience to put on their entry-level resumes. But large companies with deep pockets have repeatedly run into trouble for not paying their interns. Condé Nast, NBCUniversal, Sirius XM Radio Inc., Viacom, and Warner Music Group all agreed to pay millions to settle lawsuits brought by former interns alleging their internship programs violated minimum wage and overtime laws.


With big players struggling to manage unpaid interns, should startups even consider bringing on a college student or two without compensation? One Silicon Valley workforce development expert says no.


Startups are generally ill-equipped to comply with the legal demands of offering unpaid internships, says Daniel Newell, Workforce and Economic Development Program Manager at San Jose State University’s (SJSU) Career Center. SJSU’s Career Center placed more than 8,000 students in internships last year, he estimates.


Some employers think an internship simply involves bringing a student in and giving him or her work to do. But that’s not the case, says Newell. “If you’re looking to reap some immediate benefits from this, you don’t want an unpaid intern, you want an employee,” he says.


Internships in the private for-profit sector are considered employment, and therefore must be paid at least the minimum wage and overtime compensation, unless the internship meets six criteria set out by the Fair Labor Standards Act (FLSA).


Significantly three out of the six criteria emphasize that the experience must benefit the intern. Those three criteria are:

  • “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;”
  • “The internship experience is for the benefit of the intern;” and
  • “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.”


The remaining three criteria relate to the intern’s status:

  • “The intern does not displace regular employees, but works under close supervision of existing staff;”
  • “The intern is not necessarily entitled to a job at the conclusion of the internship;” and
  • “The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.”


In short, interns are not cheap labor. Internships should be viewed as an extension of the student’s educational experience, according to FLSA guidance. Training should provide interns with broad skills that can be used in a variety of employment settings, not just one particular company’s operations.


However, Newell discourages unpaid internships regardless of whether they meet the FLSA criteria. In Silicon Valley, where many of SJSU’s graduates end up working, most employers pay interns, he says. A startup that doesn’t have the money to pay a part-time intern minimum wage probably shouldn’t have an intern, Newell points out.


It’s important to note that internships giving college credit for the internship experience still have to comply with the FLSA, says Newell. Credit is given by the academic institution, not the company, he notes.


An intern’s supervisor is less of a manager and more of a teacher. Student interns require support and mentoring, and should be doing work that includes meaningful learning experiences, says Newell, who works closely with the San Jose Chamber of Commerce to educate employers about internships.


Paying interns has a number of benefits for the company. Clearly, it reduces the risk of noncompliance with the FLSA guidelines and the threat of legal action. Offering compensation increases the pool of potential interns because many qualified candidates can’t afford to accept an unpaid internship, says Newell. Compensation also helps retain interns, he adds.


For Newell, there’s no debate about unpaid internships because “paying minimum wage is always the best option.”


Article originally appeared on Forbes.

internship tip dont replace employees

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