Is there value in an unpaid position? What are the laws for unpaid internships? Should you consider working for free?
For some industries and non-profit organizations, unpaid internships are very common practice. Currently on Handshake, there are many for credit only or unpaid internships, and many more on sites like Indeed, LinkedIn, and Idealist. Self-made millionaire, Sidney Torres, advises “Intern in the industry you want to be in, don’t worry about what you’re getting paid,” and many others sing the praises unpaid internships offer when it comes to industry exposure and learning opportunities. However, the counter arguments suggest employers are exploiting young professionals and that completing unpaid internships will decrease future salary offers.
First, know the law. In January 2018, the United States Department of Labor issued adjustments to the Fair Standards Act that impacts internships. This changed the test for unpaid interns to determine if they are considered an employee.
Background
The FLSA requires “for-profit” employers to pay employees for their work. Interns and students, however, may not be “employees” under the FLSA—in which case the FLSA does not require compensation for their work.
The Test for Unpaid Interns and Students
Courts have used the “primary beneficiary test” to determine whether an intern or student is, in fact, an employee under the FLSA. In short, this test allows courts to examine the “economic reality” of the intern-employer relationship to determine which party is the “primary beneficiary” of the relationship. Courts have identified the following seven factors as part of the test:
1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
Courts have described the “primary beneficiary test” as a flexible test, and no single factor is determinative. Accordingly, whether an intern or student is an employee under the FLSA necessarily depends on the unique circumstances of each case.
If analysis of these circumstances reveals that an intern or student is actually an employee, then he or she is entitled to both minimum wage and overtime pay under the FLSA. On the other hand, if the analysis confirms that the intern or student is not an employee, then he or she is not entitled to either minimum wage or overtime pay under the FLSA.
Number 6 stands out to me and means the intern must be contributing to the work already being done rather than replacing the responsibilities of a typical full-time employee. It also means the intern will be able to grow his/her skill set and industry knowledge while gaining relevant experience through the internship (not just fetching coffee and making copies). The internship must be beneficial for both the intern and the employer without the expectation that the intern is replacing a paid/benefit eligible employee’s responsibilities or assignments.
If any of these guidelines are not true, the internship is eligible for pay. Consider this carefully, use it as negotiation topic when possible.
Consider your industry. Especially in the non-profit, entertainment, political, communication and several other industries, most internships are unpaid. This may have more to do with availability of funds, and not an indication of an unworthy experience. In addition, there are lots of other industries that typically have unpaid internships. If this is the common practice within the types of employers and industries you want to work for, it’s important to adjust your expectations accordingly.
Want to know what’s common and what to expect for internship pay? Ask a Mentor on Lehigh Connects for insight into norms around intern pay and compensation.
· Are internships at your company typically paid or unpaid?
· What type of compensation is fair for an internship in your industry?
· What value would an unpaid internship offer me?
· Is it worth earning academic credit for an internship with your company?
· Do I have any leverage to request pay for the internship?
· If pay is not an option, are there other benefits to the internship like paid housing, scholarships, meals, commuting costs, travel options, professional development or other types of compensation?
· Would you recommend I approach HR to inquire about compensation options?
Evaluate the experience (instead of the dollars) you could earn at the position.
Does the position grow a desired skill set and hence make you a stronger candidate for future jobs?
Will the position give you hands on experience in your field that you can market on your resume and to future employers?
Will you grow your professional network and earn strong recommendations/references for future use?
Will you be able to learn and grow as a young professional in the role?
Are you able to take on real projects, responsibilities and contribute to work they do at the company?
Will you receive any training or mentorship in the role?
If you said “yes” to one or more of those, that is a huge benefit to you. Consider pay to be one of many things you can earn through an internship but be sure there is value for you in other areas.
Keep long term benefits in mind. Candidates with internships are more likely to receive full-time offers. That internship might not pay now, but it has a real payoff during your full-time job search when you can leverage the experience to other employers. Even better, you could receive a full-time offer at the conclusion of the internship from the same employer.
Consider part-time hours. Does the internship continue all summer or only a few weeks? How many hours per week are expected? It’s possible to take a part-time unpaid internship and still work another job to help offset living costs or save for education expenses. Plenty of students work 10-20 hours a week at an unpaid internship and pick up 10-20 hours a week at a paid hourly job to help balance a professional experience and earn a paycheck. If you find an ideal internship, it might be worth working a second summer job to make it work.
Overall, unpaid internships can still provide a lot of value, and should be considered for many reasons. However, they aren’t for everyone, so you ultimately need to evaluate if it’s a good fit for you, normal for your industry, and worth your time based on what it will give you in short and long term value.