Internships: To Pay or Not to Pay?

784497 graduationMany moons ago, I had a great chance for a writing internship at a small local music magazine. There was one catch — the internship was unpaid. I could see Rolling Stone in my future…. but my journalism advisor had a different view. “My students get paid for their work!” she huffed. Reluctantly, I turned down the unpaid internship based on her advice, and she found me a paid internship closer to home.

Why tell that story now? Turns out that unpaid internship — also a bad idea because of my unreliable old Buick — might not have been entirely legal!

Offering internships can be a great way to partner with your local university to train future leaders in your field. But if you’re using unpaid interns instead of putting them on your payroll, you may be running afoul of the law.
According to Lisa Yankowitz, an employment lawyer, several states and now the federal government are keeping a closer eye on for-profit employers using unpaid interns  - and investigating employers for possible legal action and fines.The practice of using unpaid interns is growing, and recession pressures may be partly to blame, according to Education-Portal.com. In 1992, only 17 percent of graduating college students held internships, but now 50 percent of college students interned in 2008. And 25 to 50 percent of those internships were unpaid, Education Portal reports.

In response to the growing problem, the U.S. Department of Labor developed a six-part test to determine who’s a trainee or technically an employee (who should on your payroll.) To legally use unpaid interns, all six parts of the test must apply (briefly summarized here):

  • Interns should not replace a regularly paid worker, and should be supervised closely by existing staff.
  • Interns should do work that is similar to the training they’re receiving at school.
  • The employer should have no immediate advantage from the intern’s activities — their training should actually impede your work-flow occasionally.
  • The internship should be for the employee’s benefit, not just for your company.
  • There’s no agreement or promise of employment before or during the internship (of course, you can hire them afterwards if they wow you.)
  •  Both the employer and employee understand that no wages will be paid during the training period.

The value of a good internship is priceless in terms of work and life experience. But if you’re thinking about using unpaid interns, Yankowitz advises that you take a close look the six criteria. Consider either officially putting them on your payroll, paying them minimum wage, or don’t use them at all, she says.

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