Today, college students and graduates are finding it more difficult than ever to find employment. For young job seekers having a difficult time finding paid opportunities, an unpaid internship can appear like the perfect solution. Unpaid or paid internships can provide young professionals with their first step toward entering the industry or occupation of their choice. While paid internships offer wages, unpaid internships can be great opportunities for individuals from wealthy families to gain valuable professionals skills, knowledge in a practical setting, recommendations, and even future job placement. However, many businesses, especially start-ups, jump at the notion of free labor; especially when businesses don’t have to trade equity or cash.

Benefits of Employees

It’s important for people to understand that an unpaid internship is much different from a paid internship. Federal legislation states that qualifying American employees are entitled to a minimum wage, overtime compensation, and other benefits. In addition, being an employee comes with entitlements relating to discrimination, worker’s compensation, benefits, unemployment insurance, and labor laws according to each individual state. The following information explains the six essential components for an unpaid internship to be legal and not be considered employment.

Six Factors for an Unpaid Internship to be Legal

Does the Internship Train the Intern?  

Although the internship may include the actual operation of the business, it shouldn’t be work. Instead, unpaid internships should be almost identical to the training that would be offered in an educational environment.

Does the Business Benefit from the Relationship?

For an unpaid internship to be legal, the business cannot benefit. Instead, the intern must benefit from the internship.

Does the Unpaid Intern Replace Regular Staff?

While a paid internship could be a staff position, an unpaid intern shouldn’t displace or replace a regular employee. Instead, the intern could work under the close supervision of the existing staff member.

Does the Employer Benefit?

For an unpaid internship to be legal, the employer cannot gain any immediate advantages from the work or activities of the intern. An unpaid internship should not offer a competitive advantage for the employer in the form of free wages. Instead, the normal operations of the business could and may be impeded by providing an environment of learning for the unpaid intern.

Is the Intern Promised a Job at the Conclusion of the Internship?

Since the environment was strictly educational, the intern shouldn’t be guaranteed or entitled to a job at the end of the internship.

Does the Unpaid Intern Earn Wages?

Both the intern and employer should understand the intern isn’t entitled to any wages for their time spent in the internship.

For a business to be exempt from paying an intern wages, all of the previous six factors or conditions must be met. Simply put, no person should ever have to work for free in the workplace to advance their career.

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America’s Future Workforce does not provide legal advice, and this blog post is intended to heighten the awareness of business owners’ and workers’ rights. Business owners should consult with an employment lawyer before launching an internship or apprenticeship program. The information referenced in this blog post was drawn from Fact Sheet #71 published by the U.S. Department of Labor Wage and Hour Division: http://www.dol.gov/whd/regs/compliance/whdfs71.pdf.

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