Unpaid internships are common. Those kicking off their careers in the corporate world are willing to work in exchange for experience. However, before you hire your set of unpaid interns, do check the law of the land, as it may not allow you.
According to Camille Olson, who is a partner of Chicago-based Seyfarth Shaw, the most common mistake entrepreneurs make is only adhering to federally established wage laws promulgated by the FLSA as local and state laws also apply. Olson recommends checking all three, as recently states and local law have been amended, entitling interns to greater rights than before. While those adhering to federal law could argue that interns are not employees, and that only employees are legally entitled to the minimum wage, these state laws say otherwise.
The Test of Primary Benefit
On the federal level, the law dictates that the net benefit of an unpaid internship should be received by the intern, in the form of work experience, skills training, etc. If the test indicates that the employer was the primary beneficiary, then the intern should be considered an employee and hence, given wages.
Primary benefit is calculated by the level of autonomy that an intern enjoys and the nature of work given. Olson argues that, even if there is little to no autonomy and the work given is equivalent in hardness to that given to regular employees, the intern can still be unpaid as long as there is considerable coaching and training on-the-job.
Tricky to Assess Primary benefit
Assessing the primary benefit is tricky, and costly to companies, according to Rachel Bien, who is a partner at the New York based Outten & Golden firm. Bien, who primarily represent unpaid interns, also highlights that the primary benefit test moves away from the standards that are applied to evaluate FLSA issues. There is also the issue of conducted the test companywide, and for large companies, the assessment of all interns could take months.
Primary Beneficiary Should Be the Intern
It is better to design the internship program in a manner that the primary beneficiary is the intern, even if the benefit is in non-monetary terms. That is what the law primarily requires employers to do.
Olson illustrates such an ideal internship program with a hypothetical situation of an editor for a magazine that wants to hire an unpaid content-writing intern. The editor provides coaching to the intern on drafting articles and covering stories.
She also takes him out to work assignments, asks all the questions while the intern makes notes. When they get back to her office, she deconstructs the interview and highlights the direction for the story to the intern, who is then expected to construct the first draft. After feedback and approval, the intern would write the final article. This scenario shows how the unpaid internship can be for the net benefit of the intern. Had the editor given complete autonomy to the intern, and given him articles to write without guidance, then it would be for the benefit of the employer.
Are You an Intern Doing an Employee’s Work?
According to Bien, the best way interns can demand wages is by identifying employees whose work is similar to the work you are expected to perform without wages. The fashion industry is infamous for hiring unpaid interns for free in exchange for industry exposure. In the absence of sufficient interns, the industry hires freelancers. This means that interns in the fashion industry should also be paid, as the hiring of freelancers for a fee validated payment for the work being done.
It is the job of the unpaid intern to make an assessment of the internship program. Some employers are in the habit of suggesting to interns that their performance will impact their chances of securing a permanent job at the company. Bien recommends employers to not make such statements and promises of future employment which a company, by law, is not bound to oblige. It should be borne in mind that an internship is only limited to the duration of the contract and does not establish a permanent relationship with a company.
Knowing these facts should allow you to understand whether an internship should be paid or not.
