unpaid internships

An intern at work. Photo credit: Michael O Leavitt Center for Politics

Despite the many high-profile court settlements, many companies may not be getting the message that interns must be paid unless they meet specific criteria.

In a recent class-action settlement, Warner Music Group Corp agreed to pay hundreds of former interns who said they were underpaid or not paid at all. The tab was more than $4.2 million, according to Reuters. The settlement covers interns who were paid less than minimum wage or not paid at all in periods dating as far back as June 2007.

Other major media corporations that were forced to settle with interns include NBC Universal, Conde Nast and Viacom Inc. The court decisions highlight the importance of following federal regulations when employing interns. Basically, companies must pay workers at least minimum wage unless the internship is designed as purely a training or educational program.

All interns should be paid if they do work that otherwise would be performed by a paid employee. In reality, most all tasks performed by interns except observing or attending educational seminars would otherwise be performed by paid employees.

Marketing and public relations firms often hire interns. As we head into summer, the main period for employing college interns, it’s advisable for all organizations – especially those without human relations departments that enforce internship regulations — to review federal regulations on internship programs.

The Labor Department’s Rules

Companies using unpaid interns violate federal and state minimum wage laws unless they the Department of Labor’s six criteria. Internships must meet all six criteria.

  1. The internship, even though it includes the intern’s operation of the employer’s facilities, is similar to training which would be given in an educational environment;
  2. The internship experience benefits the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the intern’s activities, and on occasion, its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and intern understand the intern is not entitled to wages for the internship.

The key criteria that most employers fail is: The employer must not derive immediate advantage from the intern’s activities. That rule indicates that interns must be paid if they perform work that would otherwise be done by a paid employee or outside service (even fetching coffee).

A Call for Compensation

Responsible organizations and most HR professionals agree that no one should perform work for free. When people complete tasks that benefit a business, they should be compensated — no matter what the position is called and even if it involves an educational component.

Internships have become a gateway from college to professional careers and have exploded in number over the last decade. Interns themselves are willing to work for free in an attempt to gain experience and juice their resume.

About a million students intern over the summer. Despite the lawsuits, the research firm InternBridge says that 35% of them – 38.2% in the private sector – are unpaid, reports Forbes in an article written by a paid intern.

The unfortunate reality is that too many interns perform menial tasks and gain very little educational benefit. On the other hand, some interns provide valuable services for which they are not paid. Both situations are forms of exploitation that should stop; organizations that can’t afford to pay interns shouldn’t take them on. The risk is high: Unpaid interns – especially those who didn’t get a worthwhile experience – increasingly are reporting employers to the Department of Labor.

The logical outcome of following the regulations will be fewer but much better internships that benefit both the intern and the employer.

Bottom Line: Too many organizations have taken advantage of young people in order to obtain a free source of labor. It’s crucial for organizations to either pay their interns or ensure their internship programs provide interns a worthwhile educational benefit. If employers fail to meet Department of Labor employment standards, they leave themselves open to lawsuits and resulting public relations damage.