Posted July 12, 2019 by

Is it Time for the Unpaid Internship to Die?

Is it Time for the Unpaid Internship to Die?

A quick online search will find you as many unpaid-intern horror stories as you care to read. From having to beg or borrow money to pay for transportation or work-approved clothing, to single-handedly moving a manager’s personal furniture out of one apartment into another, to picking up dog excrement, there are employers who think no task is too awful or undignified to assign to their poor unpaid interns.

The dismal reputation of the unpaid internship has led to a debate over whether this type of internship has outlived its usefulness—and common decency. The debate gained new momentum in January 2018, when the U.S. Department of Labor (DoL) rolled out new guidelines that make it easier for companies that want to hire unpaid interns.

The Primary Beneficiary Test

These new rules established a seven-point test, known as a “primary beneficiary test,” that determines whether the unpaid internship benefits the intern more than the company (the link to the DoL page showing the seven factors is listed in the Sources section of this article). If an analysis of the situation reveals that the intern is actually doing the work of an employee, he or she is entitled to both minimum wage and overtime pay under the Fair Labor Standards Act (FLSA).

However, the seven factors are open to interpretation, which some labor advocates fear will allow them to justify even the most mundane tasks—for instance, fetching coffee—as “learning the industry.” And while most of us agree that it’s never a bad thing to work your way up from the bottom, the potential for abuse by more unscrupulous employers is still there. This can open all employers up to lawsuits; in fact, the new DoL guidelines came about in response to lawsuits filed by interns alleging that their unpaid work on a film violated the FLSA. The courts agreed.

Future Disadvantages

A study by the National Association of Colleges and Employers showed that students who took unpaid internships or co-ops were less likely to receive a full-time offer of employment and, if they did receive an offer, a lower salary than their counterparts who took paid internships or co-ops.

Paid internships or co-ops with private, for-profit companies resulted in the highest offer rate, while similar, if less drastic, disparities were seen in other industries (figures are paid vs. unpaid):

  • Private, for-profit: 72.2% vs. 43.9%
  • Nonprofit: 51.7% vs. 41.5%
  • State/local government: 50.5% vs. 33.8%
  • Federal government sectors: 61.9% vs. 50%

There were also disparities in starting salary offers (again, paid vs. unpaid):

  • Private, for-profit: $53,521 vs. $34,375
  • Nonprofit: $41,876 vs. $31,443
  • State/local government: $42,693 vs. $32,969
  • Federal government sectors: $48,750 vs. $42,501

Other reasons to put unpaid internships to rest are simple ones:

  • Happier, more productive interns (a paycheck is a powerful motivator!)
  • Positive feedback from employees is better for an employer’s brand
  • Paid internships attract top talent, which is more likely to lead to full-time hires  
  • Students who are paying their way through school and need the money from an internship to continue their education, or who have taken on student debt they have to begin paying back after graduation, may be great candidates—but they won’t be able to work for any company that doesn’t provide a paycheck

Of course, not all unpaid internships result in horror stories. With a principled employer, the result can be a rewarding one; if not financially or in future prospects, at least in knowledge and experience. However, if you’re offering unpaid internships now, it’s worth studying the ways you can improve the process and reward your interns for their hard work on your behalf. Even an upgrade to minimum wage will give a worker a sense of empowerment and dignity that can make them a fan of your company—and, quite possibly, a future valued employee.

Sources:

https://www.thecut.com/2018/07/7-people-on-their-most-insane-unpaid-internship-stories.html

https://www.naceweb.org/job-market/internships/exploring-the-implications-of-unpaid-internships/

https://www.dol.gov/whd/regs/compliance/whdfs71.htm

https://www.naceweb.org/job-market/internships/paid-interns-co-ops-see-greater-offer-rates-and-salary-offers-than-their-unpaid-classmates/

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