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The Truth Behind Unpaid Internships

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The Truth Behind Unpaid Internships

By NicoleD
Published: June 10, 2010 Updated: April 23, 2013

Unpaid internships are not illegal, but there are very strict guidelines that employers must adhere to. Even if a student worker receives academic credit for an internship, it does not mean that can they work for free. Read on to learn when an internship can be unpaid and how to stay within the law when employing student workers.

Understanding the law

The basic principle behind a legal unpaid internship is simple - unpaid interns cannot do any work that contributes to a company's operations. This includes any tasks that help you run your business, like documenting inventory, filing papers, answering emails, etc.

So, legally, what can an unpaid intern do? Unpaid interns can shadow other employees and perform duties that don't have a business need. For example, a bakery may allow an apprentice to decorate a tray of cookies that will not be sold to customers. Because the task was only a training exercise for the apprentice and the bakery did not receive any benefit from that work, the bakery would not have to pay that student worker for their time.

Rules for employers - When are unpaid internships legal?

If you're thinking about offering an unpaid internship, the Department of Labor has applied the following guidelines to help you stay within the law. ALL must be met in order for an internship to be unpaid:

  1. The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school
  2. The training is for the benefit of the trainee
  3. The trainees do not displace regular employees, but work under close observation
  4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer's operations may actually be impeded
  5. The trainees are not necessarily entitled to a job at the completion of the training period
  6. The employer and the trainee understand that the trainees are not entitled to wages for the time spent in training

Benefits for employers

Despite the limitations on the duties unpaid interns can perform, many small businesses find them valuable. For employers, an internship allows you to audition potential employees without having to invest in labor or benefits.

However, if you want to hire workers to help offset your workload, you can still offer an internship, but it can't be unpaid. Employers that can afford to offer paid student internships often benefit from the arrangement. The flexibility of internships can free you of long term employment commitments, an especially important factor for seasonal businesses. Paid internships can also help you acquire a specialized skill at a good price - if you need assistance with marketing or setting up a website but can't afford a professional, students looking to boost their resume are often a good bet.

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Is college credit part of the package of being an intern? Are their specific federal guidelines for an internship to gain college credit? Does it just depend on the guidelines the college stipulates?
Our plan is to have someone intern with us in the HVAC trade. When we have actual work that he is doing we will be paying him and when he is riding along as a shadow it is un paid is this an acceptable practice. Do we have to be certified to have an internship?
What is the procedure to alert SBA to possible violations?
In the past, I've been getting internship at a company in the information technology sector is subsidized at lunch, take a lot of time so I could be learning their majors. After working here for 2 months, I was pleased to practice elsewhere with 50% of salary, then get straight to the company as permanent employees. I see, there are quite many companies recognize unpaid internship and trainee also accepted. The trainee should learn the rules carefully when receiving internship at the company to ensure their rights.
Do you have to be registered LLC to offer an internship opportunity or can registered sole proprieterships and non profits offer internships?
Actually, on the word, many people intership unpaid. I hope this post helpful for everyone
What is the procedure to alert SBA to possible violations?
The Schakolad Chocolate Factory at 7740 Nova Drive, Davie, Florida employs an unpaid apprentice to work within their store under the guise of training. It sounds to me as though this employer has broken each of the seven benchmarks you have listed. Is such a practice actually regulated or are companies free to do as they like in such situations?
Hello NicoleD. We are working on the startup that will help high school students to connect with local businesses to experience different careers. The term of mentorship is five days. I was wondering what laws businesses would have to follow since mentorships are unpaid and "The training is for the benefit of the trainee;". Please if you could contact me via email gil[at]mymentorlink.com. Thank you in advance.
It is interesting to read about all these restrictions. Internships are essential part of education process as they give students/recent graduates an opportunity to start tranforming their knowledge into real work and to establish themselves in the labour market. I myself passed through an unpaid internship stage and do not regret it. Though it is not a policy-makers discussion, but something needs to be done so that internship rules do not make interships useless for employers and interns.


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