Are Unpaid Internships Legal?

Internships often considered a rite of passage for college students. Some degree programs expect a period of unpaid work prior to graduation – teacher preparation programs, for instance. Some professional licensing boards also require a period of supervised work prior to licensure and an unpaid internship might help fulfill that requirement. Thus, unpaid internships have become a large part of education and the professional world.

However, these unpaid internship programs are coming under increased scrutiny. There are laws moving through the federal legislature which address issues that interns face and certain states are expanding protections for unpaid interns. Though they are still legal, and probably will remain so, that status is likely to be further regulated to ensure that the sacrifices interns undertake are reciprocated with increased fairness and safety.

What is the Point of an Unpaid Internship?

Unpaid internships are designed as learning tools. Students often design an unpaid internship along with a faculty member as well as a manager from the site where the internship is to take place. They discuss the learning objectives the student should meet, as well as any end products the student is expected to produce. For instance, students might write a paper, create a portfolio that reflects their work, or create a presentation.

Thus, the point of an unpaid internship is not only to gain work experience for its own sake, but to complete academic objectives. For some students, for whom work experience is vital to some later license or certification, so the internship takes on an added importance. The educational aspect is a huge part of why companies or other employers categorize interns separately from their regular workforce.

Though there are an increasing number of paid internships, students still take unpaid internships because they are often easier to get. Paid internship programs typically create more competition, which naturally excludes even highly qualified candidates. For some students, such as those in teacher preparation programs, there is little choice but to take an unpaid internship, as schools find it hard to budget for student-teachers. Furthermore, many feel that internships are synonymous with non-paid work experience.

Is it Accessible?

An unpaid internship is not always financially feasible. That is, since they often take a student's entire summer students must find a way to support themselves during this time. Not only must they find a way to cover rent, food, and basic expenses, but they often need to purchase a new professional wardrobe. This puts students in a bind. Over the long-term, the experience may be invaluable but, in the present moment, the sacrifice might be too great or may limit accessibility to those who can themselves or whose families can afford to cover these expenses.

Students could choose to seek out options such as living with their parents or other family members while they work on the internship. There may even be grants or scholarships available which will help cover not only the college credits but a student's expenses, too. There are ways to get around some of the expenses of this venture, but students must make sure that they are going to get more out of it than they are putting in.

Is it Moral?

In ethical discussions, the issue is often whether people benefit more than they are harmed. If an unpaid internship program is perceived a providing the foundation for a lucrative career, then the short-term sacrifice is seen as an equitable price to pay. However, many will question whether or not these experiential learning programs are provided equitably to all.

The morality of unpaid internships is heating up as a topic of discussion. In the past, college tuition and rents were such that students could pull off the expense of an internship with savings or a side hustle. This meant that the trade-off for experience and college credit was seen as fair and equitable. Nowadays, students need to work longer and harder for the same credits, food, and apartments. This means that internships are increasingly an option for only the wealthiest students. This is particularly true in expensive housing markets such as New York City, where students are also likely to find the best internship opportunities. There seem to be programs popping up in NYC and elsewhere that are designed to help students get the work experience they need, so the playing field may yet level off.

However, the equity and value of an internship are something that students are going to have to decide for themselves. If you will only be a glorified gofer for the time you work at this company, will it really give you a valuable return compared to what you’re putting into it? Perhaps you are looking to gain a mentor or network instead of getting hands on experience, in which case this might be worth it for that return. It really depends on each individual’s experience, and you must advocate for yourself in this regard.

What Do Students Get Out of Them?

Internships tend to be a terrific value to a student whether or not they are paid. In fact, future employers are unlikely to care whether or not an applicant was paid during their internship or not. There are exceptions, such as corporate fellowships that include work experience or co-op programs, which aren't technically internships. Regardless, the most important result of an internship is the work experience.

Students can also receive college credit for completing an internship. Thus, they can boost their GPA while adding real-world work experience to their resume. The work experience may even inform their future academic work in that they can apply lessons from the world of business to their coursework. This makes them not only more employable in the business world but also stronger students on campus. Furthermore, students can use internships to help focus their resumes and land a job that best suits their degree and long-term career goals.

On top of the pragmatic aspects of learning certain skills while working for a real-world business or other organization, the fact of the internship can be helpful, too. Employers love to see when students have gone above and beyond their degree requirements. Other ways to impress future employers is to work the same work-study job for four years, hold a campus leadership position, or to find some equally challenging summer job.

So, Is It Legal?

Assuming that a workplace is safe and abides relevant employment laws, an unpaid internship is fully legal. In fact, these sorts of working arrangements have been part of the business world for centuries. In the 1800's, and into the early 1900's, youngsters would often work for little more than food and a pallet in exchange for an apprenticeship. The modern-day equivalent can thus be seen as equal; some even see contemporary, unpaid internships as far better than what our ancestors endured.

In these modern times, however, unpaid interns aren't afforded room or board and still must dress according to the professional standard and otherwise behave as though they were paid employees. This raises the question of whether these unpaid internships are exploiting interns. Some would say that the interns receive invaluable work experience that pays far more than a summer's wage. However, others point out that companies receive free labor for which they are obliged to pay. Still, the law and most of the business world sees unpaid internships as a free choice that students take willingly.

The Law

The Fair Labor Standards Act

To address labor issues in the United States, we have the Fair Labor Standards Act. This law primarily addresses issues such as salaries, minimum wage, overtime compensation, hours worked, time/pay record keeping, and child labor. This law is enacted, in part, to define what constitutes an employee and regulates the employer-employee relationship so that workers are fairly paid and treated.

Currently, employees in the United States are guaranteed a federal minimum wage of $7.25 per hour. This pay rate can, and often is, increased when states institute a higher minimum pay standard. Oregon, for instance, requires that employers pay a minimum wage that ranges from $11.50 in rural areas to $13.25 in urban centers. Overtime regulations are added to this minimum pay and the FLSA requires that employees receive 1.5 times their pay rate for any time that exceeds 40 hours in any workweek. The FLSA does not acknowledge nor mandate additional pay for work on any holiday, though employers may be bound to any employment agreements that offer special holiday compensation.

Primary Beneficiary Test

The law has addressed the issue of unpaid internships by way of the Fair Labor Standards Act. To determine if an internships is fair and legal, the courts apply a standard known as the "primary beneficiary test". The reason internships are considered legal is because unpaid interns are not considered to be employees in the eye of the law. That is, the employer-intern relationship is seen as more instructive and educational than economically and financially beneficial to the business.

The seven point "primary beneficiary test" establishes that there is no expectation of compensation to the intern except the educational value of the internship, and that the experience is not intended as any guarantee of later employment. The test even addresses how the internship adheres to the restrictions of the academic calendar.

Essentially, the FLSA seeks to reinforce that an unpaid internship remains in the spirit of education more than employment. With that in mind, businesses that provide unpaid internships and their interns will be well-served by reviewing the FLSA's section on internships.

Other Legal Protections

Interns may realize that they are not employees and thus not entitled to compensation, but they may not realize that they are not guaranteed protections from things like sexual harassment. Since unpaid interns are not employees their status is somewhat nebulous. In fact, the existing law seems to do more to protect businesses from employment claims than the unpaid interns they work with. That is, businesses are free to use their unpaid labor so long as certain agreements are in place. Interns, on the other hand, have no legal recourse based on their non-employee status.

Thus far, only California, New York, and Oregon have passed laws that protect unpaid interns from harassment or other wrongdoing. Other states have enacted statutes that protect interns from discrimination which hopefully will open the door to expanded legal protections and recourse for harms. However, there is a bill that protects interns, but it is still pending a Senate vote at this time.

The Federal Intern Protection Act passed the Congress in early 2019 but there is yet no indication of when the Senate will consider that legislation. Though the law only specifically addresses unpaid interns in federal agencies, the legal precedent may help those in the private sector.

Unpaid Internships are Falling Out of Favor

Given that the media is paying more attention to unpaid internships, they are increasingly falling into disfavor. In recent years, certain politicians have made this an issue and have thus agreed to pay their own interns as a way of setting an example. Their implicit claim is that unpaid internships are exploitative and unfair. They thus seek to attract and maintain a diverse and eager staff of interns by paying them a suitable wage. Meanwhile, other candidates who purport to represent labor interests have been found using unpaid interns and the backlash has been rather intense.

The issue seems to be heating up, in part because students are having a harder time paying for their tuition, not to mention room and board. Trying to maintain any standard of living while working full-time in an unpaid internship is untenable for many middle- and lower-class students. Thus, an unpaid internship is becoming the sort of benefit that is only available to wealthier students. In fact, studies are showing that students from high-earning households either don't work or only work 15 hours a week in career-focused internships.

Should You Opt for an Unpaid Internship?

Unpaid internships are fraught with difficult choices. On the one hand, they seem to offer a terrific opportunity to engage with one's chosen industry and gain experience in that field. The resulting benefit to one's resume can mean landing a better job or enrolling in a better graduate school after college. On the other hand, the stress of maintaining a standard of living while pursuing an unpaid internship can be detrimental to one's performance in the internship, school, and elsewhere. Furthermore, there is no guarantee that the sacrifices one makes will, in fact, pay off with improved job opportunities.

Here are a few questions to help students decide whether or not to pursue an unpaid internship:

  • Will the internship provide the sort of experience I need to land a good job after graduation?
  • Can I effectively balance coursework while pursuing the internship (if the two overlap)?
  • Can I maintain a decent standard of living while working as an unpaid intern?
  • Have others from my school found similar internships? What was their experience?
  • Are there grants or scholarship programs available that include internship/fellowship programs?