A big discussion at ChrisBrogan.com about unpaid internships spilled over into the question of whether unpaid internships are legal in the US.
I used to work in the field of workforce development (back in the dark ages), so I wasn’t afraid to head to DOL to check. Here’s what my research says:
Unpaid internships would not be legal when the intern would otherwise be considered your employee.
Quoting the US Department of Labor: “labor standards will apply in any situation where an employer/ employee relationship, as defined by the Fair Labor Standards Act, exists.”
How could an intern be considered an employee?
The basic issue is control. For an employee, you have the right to control the details of how the services are performed. With independent contractors, you control only the results, not the means and methods. This is why interns are more likely to be classified as employees: they are not experienced enough to take full control over their work methods.
The big question:
Are you likely to get in trouble for offering an occasional unpaid internship for a specific project, like Chris did? I doubt it. If you abused the principle with repeated offerings of multiple unpaid internships performing core duties in your business, you’d be at high risk.
For more info on employee versus independent contractor, check with the IRS.
In a New York Times story on internships, more details about internship regulations were provided.
“If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law,” said Nancy J. Leppink, the acting director of the [federal Labor Department] wage and hour division.
Ms. Leppink said many employers failed to pay even though their internships did not comply with the six federal legal criteria that must be satisfied for internships to be unpaid. Among those criteria are that the internship should be similar to the training given in a vocational school or academic institution, that the intern does not displace regular paid workers and that the employer “derives no immediate advantage” from the intern’s activities — in other words, it’s largely a benevolent contribution to the intern.
Many employers say the Labor Department’s six criteria need updating because they are based on a Supreme Court decision from 1947, when many apprenticeships were for blue-collar production work.
I think it’s clear that almost all unpaid internships are not legal in the United States, despite the fact that some unpaid internships are valuable opportunities.
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Becky started Small Biz Survival in 2006 to share rural business and community building stories and ideas with other small town business people. She and her husband have a small cattle ranch and are lifelong entrepreneurs. Becky is an international speaker on small business and rural topics.