April 05, 2010

There has been an increase in unpaid internships in recent years, and many of these internships could be illegal. This is especially increasing during these tough economic times because employers are looking to cut costs. In addition, students and other young job seekers are willing to take unpaid internships to help their resumes or they feel that taking this internship could help get their foot in the door. Federal and state regulators are investigating this issue to prevent employers from using these internships as a source of free labor, which violates minimum wage laws. Oregon, California, New York, and other states have ordered investigations into several firms' internships and have fined employers. The federal Labor Department's wage and hour division is increasing enforcement nationwide. In addition, they will be expanding efforts to educate companies, colleges, and students on the law regarding internships. Regulators say that the violations are widespread, but it's hard to crack down on firms because interns are often too afraid to file complaints. They fear that they will be labeled as troublemakers in their chosen field, and that this could hurt their chances of finding a career in the field.

For an internship to be unpaid, the internship has to comply with six federal legal criteria. Among those criteria are that the internship should be similar to the training given in a vocational school or academic institution, that the intern does not displace regular paid workers, and that the employer "derives no immediate advantage" from the intern's activities. Many employers that fail to pay their interns do not meet the six criteria. The acting director of the Labor Department's wage and hour division said, "If you're a for-profit employer or you want to pursue an internship with a for-profit employer, there aren't going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law." California and some other states require that students receive college credit as a condition of being unpaid. But federal regulators say that receiving college credit doesn't necessarily excuse companies from having to pay interns, especially if the internship involves little training and mainly benefits the employer. The rules for unpaid internships as less strict for non-profit groups like charities because people are allowed to do volunteer work for non-profits.

The director of the Career Development Center at Stanford University said that employers posted 643 unpaid internships on Stanford's job board this past academic year -- which is more than three times the 174 posted two years ago. The National Association of Colleges and Employers found that 83% of graduating students in 2008 had held internships, up from 9% in 1992. Hundreds and thousands of students hold internships each year, and it's estimated that one-fourth to one-half are unpaid. Many students say they held internships that involved noneducational menial work. Many internships do in fact involve some unskilled work or tedious tasks, but regulators say that when the jobs are mostly drudgery, it is clearly illegal not to pay interns. For example, one Ivy League student had an unpaid, three-month internship at a magazine, and she said she spent the day packaging and shipping apparel samples to fashion houses that had provided them for photo shoots. An NYU student had an unpaid internship at a children's film company, and was hoping to do some work in animation; instead, the student was assigned to the facilities department and had to wipe down door handles each day to minimize the spread of swine flu.

The rise in unpaid internships is also hurting low-income students. Less affluent students cannot afford to spend their summers at unpaid internships, and as a result they are losing opportunities to make connections and to increase their employment prospects. A Stanford graduate and one-time unpaid intern (who is writing a book on the subject) said, "Employers increasingly want experience for entry-level jobs, and many students see the only way to get that is through unpaid internships." Another harm of the unpaid internship is that the interns are often not considered employees and are therefore not protected by employment discrimination laws. For example, one female intern brought a sexual harassment complaint against an employee, but it was dismissed because the intern was not an employee. (Full Story)