Unpaid internships are common, but are they legal?

Katie Loehrke is a human resources subject matter expert and editor with J. J. Keller & Associates, Inc., a nationally recognized compliance resource firm. The company offers a diverse line of products and services to address the broad range of responsibilities held by HR and corporate professionals. Loehrke specializes in employment law topics such as discrimination, privacy and social media, and affirmative action. She is the editor of J. J. Keller’s Employment Law Today newsletter. For more information, visit www.jjkeller.com/hr and www.prospera.com.

More than 1 million Americans a year work as interns. Some of these work opportunities occur solely during the summer months; others are more open-ended in terms of calendar and duration. Surveys show that approximately one-half of all interns are unpaid. Do you and your company know the rules on whether or not an internship requires paid compensation?

The kids are willing, but are you able?

In today’s slowly recovering economy, college-goers may be watching many of their fellow students graduate and then look around furiously for jobs that don’t seem to be abundant enough for everyone. As a result, you may find more and more eager graduates and pre-graduates willing to work as interns for your company, especially as summer rolls around. In exchange for a leg up in the job market, they might be willing to do any work, for any number of hours, for any kind of pay — or for no pay at all. But should you let them?

Regardless of whether or not they’re willing to work for free, interns whose work benefits your organization must be paid at least minimum wage for the time they put in. That is spelled out in the Fair Labor Standards Act, which is enforced by the U.S. Department of Labor. In order to be unpaid, an intern must receive training from your organization that benefits the student and is similar to the training he or she would find in a vocational school. However, that training cannot advance your company’s interests.

For instance, you might help an intern develop the skills to sort and route mail at your company, but if the individual is performing the tasks that a regular employee would normally perform, the intern must be paid. While an unpaid intern could work with another employee to learn a process, the intern may not actually perform the employee’s job.

As you can see, the standard to be unpaid is really quite high. In addition to not benefiting from an unpaid intern’s work, the company might actually have normal business operations hampered by the intern’s presence.

In the case that you might actually have an unpaid intern whose work does not benefit the company at all, the intern must understand that he or she is not entitled to wages. He or she must also not be guaranteed a job at the end of the internship. If the employee was entitled to a job, the training he or she received would be considered a benefit to the company, and the internship could not be unpaid.

Not free, but still valuable

While it’s possible for a company to have an unpaid intern (legally, that is), it’s not likely, but that doesn’t mean interns can’t be beneficial. Savvy businesses can still use interns as extra help at a low cost, and internships give you a chance to get to know an individual for a particular period of time.

While the hourly cost of interns can be small, remember that their contributions to your company don’t have to be. Instead of assigning menial tasks to interns and keeping them separate from your “real” employees, give them actual work, complete with challenges and opportunities for problem solving.

Your regular employees crave a sense of belonging and appreciation in addition to opportunities to grow and be challenged on a daily basis, and interns are no different. Treating them as you would other employees gives them a true taste of a career with your company. Even though you’ll probably need to pay them for their work as interns, your work with them now could translate into an investment in your company’s future.


In order to be unpaid under the Fair Labor Standards Act, an internship must meet six requirements:

  1. The training is similar to training the student would find in a vocational school;
  2. The training is for the benefit of the student/intern;
  3. The training doesn’t replace the work of regular employees;
  4. The intern is not entitled to a job at the end of the internship;
  5. The intern understands he or she is not entitled to wages for the training; and
  6. The employer that provides the training not only doesn’t benefit from it, but in fact, the training may actually hamper normal business functions.

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