Internships, whether paid or unpaid, can give students some great work experience for their future careers. Both choices offer education and training, but only one comes with a paycheck. If you’re looking to gain some experience and strengthen your resume, you might have to do some unpaid work.
As per the 2023 statistical research by the National Association of Colleges and Employers, there are approximately 4.1 million paid internships and 1.64 million unpaid internships.
At first, companies might think that unpaid internships are a good way to save money. However, unpaid internships can end up costing the company a lot more in the long run.
The Fair Labor Standards Act Internships (FLSA) has set ground rules on what constitutes the legal status of unpaid internships. According to the FLSA 1938, interns working for a for-profit company must be paid accordingly.
Both companies and future interns should pay attention to the legal definition of unpaid internships. Proficient knowledge of these guidelines saves both parties from legal disputes.
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What Are Unpaid Internships?
Unpaid interns aren’t given the same duties as the employees who are getting paid. In an unpaid internship, you’ll probably be doing a lot of helping out and getting to watch and learn from the other employees. These internships focus more on education, learning, and gaining experience.
Apprenticeships date back to medieval times. A new apprentice learns a trade by working with an experienced master over time. In traditional apprenticeships, workers didn’t receive pay and relied on their teacher for guidance while learning a job. After years of apprenticeship, the apprentice will have acquired enough skills to start their own business.
The Legal Framework for Unpaid Internships
Companies should ensure that their unpaid internship positions are beneficial for the interns. Simply stating that both parties benefit is not sufficient; it’s who that benefits the most.
The US Labor Department uses a flexible seven-part primary beneficiary test for for-profit companies.
- The intern knows they won’t be paid.
- Training is similar to education received in school.
- The internship is linked to the intern’s current educational program, which may include receiving academic credit.
- The internship works with the intern’s school schedule.
- The internship is only available for the time the intern is gaining beneficial learning.
- The intern’s work complements the existing employees’ workload.
- The internship does not guarantee a job at the end.
Internships without pay can be valuable for college students who want to start their careers with required work experience. They might see internships as a way to pay for work experience instead of giving their work to a company for free.
Companies need to check the laws in their state before hiring interns. Several states have their regulations for unpaid internships, even though the federal government doesn’t have strict rules. Some states prefer to use the seven-point test as the standard, but others have their own criteria.
The Pros and Cons of Unpaid Internships
The debate over paid vs. unpaid internships has been ongoing for years. Both have their advantages, and the right choice depends on the situation.
Here’s a rundown of the pros and cons of doing unpaid college internships to help you make your choice:
| Pros | Cons |
| Invaluable Experience | Compensation is not provided |
| Relevant Field | Laborious task |
| University credits | |
| Professional connections |
How Unpaid Internships Benefit Businesses
Employers benefit a lot from unpaid internships. This is why it has been a common practice for many businesses, especially those in competitive industries.
These interns are not given a salary, so businesses save money, especially for short-term or project work. Moreover, interns, especially those from top schools or with specific skills, can bring value without the full salary of a permanent hire. This often gives companies the chance to improve their workforce at a zero percent cost increase. It’s also often used to find potential full-time employees.
Paid and unpaid internships can be easily confused. If you’re not doing any work and just following others, you won’t qualify for minimum wage and will be considered unpaid labor under the unpaid labor laws. If you have to work a set number of hours for a few weeks or months, it’s likely an internship rather than a brief unpaid work experience.
The questions below can help you determine if it’s an internship or just unpaid work. If you answered “no” to these questions, you’re likely not getting paid. If you answered “yes,” then it counts as internship experience.
- Do I have to do a right-to-work check?
- Do I get the national minimum wage?
- Do I have a job contract?
- Am I allowed to do the job tasks by an employee?
- Is it necessary for me to have regular planned meetings and help?
Controversies Surrounding Unpaid Internships
Unpaid internship controversies have gained more traction over the years. More critics have said that unpaid internships should be unacceptable simply because they are unethical and wrong.
Companies may have interns do work for free without any intention of hiring them full-time. Also, internships that don’t pay make racial inequalities in the job market even worse. The racial wealth gap means Black and Latinx families are less likely to afford the living and college expenses needed for unpaid internships.
Since internships are often a stepping stone to jobs, this creates a barrier for students of color, making it harder for them to access career opportunities. As a result, higher positions in many industries may become even less diverse.
Moreover, research has found that unpaid internships don’t give students the benefits they thought they would. According to a survey of college students by the National Association of Colleges and Employers, students with paid internships are more likely to get job offers and higher starting salaries than individuals with unpaid internships in 2022.
Having more interns or volunteers can replace regular employees and worsen the job market, which is not good for the economy. Replacing paid workers with unpaid interns can reduce tax revenues, which in turn affects local, state, and federal budgets.
Alternative Internship Models
Perhaps we can all agree that paid internships are the best—not just for students but also for businesses. For students, they gain work experience while also earning an income. For businesses, offering paid internships helps attract top talent, as students are more likely to apply for positions that offer compensation.
Aside from internships, several other models can provide students with similar benefits. These include:
- Co-op Programs
- Apprenticeships
- Short-Term “Shadowing” Programs
- Mentorship and Informal Learning Models
The best internships (whether paid or unpaid) have these key features:
- Provide interns with a mentor.
- Give interns meaningful projects that help them build skills.
- Introduce interns to people in the company and industry.
- Make sure everyone feels welcome, respected, and valued, no matter their background.
- Provide interns with regular feedback.
Legal Considerations for Businesses Offering Internships
If businesses want to hire unpaid interns, they should be well aware of the legal guidelines for internships and reach out to their local Department of Labor Wage & Hour Division to see if the FLSA rules apply to the internship they want to offer.
Small business owners should be cautious in their decisions. Here are important tips on how to create legal internships and avoid disagreements between a business and an intern who is not paid.
- Write down all agreements about payment and dedication.
- Make sure both the intern and their supervisor sign all the terms of the internship.
- Make sure to record the number of hours worked and any overtime.
- If possible, provide college credit for the course.
- Focus on training that can be used in different jobs and don’t make people do menial tasks. Some traditional employee training methods might be useful.
Businesses thinking about having unpaid interns should remember that there could be legal consequences for both the company and the intern if things go wrong. Transparency and offering good internship programs provide significant educational value.
Conclusion
In conclusion, there are advantages and disadvantages to unpaid internships. Internships are a good way to gain work experience and make connections, but they can also make it harder for people who are not wealthy or live far away to get a fair chance.
Paid internships are great because they give students both financial support and real-world experience. But businesses can also try alternatives like co-op programs or mentorships, which can be just as valuable without relying on unpaid labor.
Internships should benefit everyone. Companies need to make sure the work is meaningful, fair, and legal.
