Unpaid Internships: No Pay, No Gain?

Posted by Liz Seasholtz on May 3, 2011
Unpaid Internships: No Pay, No Gain?
Caitlin Birch, a senior at the University of Delaware and English major, is lifeguarding this summer.

No, it’s not because she loves one-piece bathing suits, the scent of SPF 40, and any chance to show off her talent for whistle-twirling, but because she cannot afford to take an unpaid internship in her future career field of magazine journalism.

“I love hearing about the unpaid internships my friends have taken, and I don't resent the fact that they're able to take them, but I definitely recognize the growing gap between me and them with each internship they take,” Birch says. “They're able to get experience that I can't afford to get right now, and that experience is pivotal in the job search.”

Birch’s concerns reflect those of many undergrads who are unwilling to accept unpaid positions and question whether these internships are fair.  In academic circles, eyebrows are also raising over the ethics of unpaid internships—not only because of the lack of compensation, but because internships rewarded in credits don’t always have the required educational value.

The government’s office of compliance defines an intern as an individual performing services in an office as a part of an educational plan whose temporary work will not exceed a total of 12 months.  

The first problem arises when there is no “educational plan” set, and students are expected to work as a normal employee, receiving credits for their work instead of monetary compensation.  Students are then left paying for the credits, and essentially paying for their work as an intern, presenting a second problem and an option which is not financially feasible for students like Birch.

According to InternBridge.com, a management consulting company that conducts the largest internship research in the country, 18 percent of over 12,000 student interns surveyed were both unpaid and received no credit.  Of the students that received college credit for their internship, 71 percent had to pay for those credits.

“This is an extremely, extremely controversial area,” says Richard Bottner, president of InternBridge.com.  “As far as legalities go, most internships that are unpaid are probably not legal, and the real problem with the whole situation is that very few internship compensation cases have ever gone to court.”

As the number of undergraduate students accepting internships continues to grow (according to InternBridge.com’s study, 60 percent of students reported internships were now mandatory for their university), there is an expanding grey area defining legal, and educational, unpaid internships.

Louis DiLorenzo, co-chair of the labor and employment law department for the firm of Bond, Schoeneck & King, PLLC says legal problems with unpaid internships are often unreported because they are settled outside of a court room.  In effect, it has been difficult to set a judicial precedent.

“Where you see problems are companies where somebody in the department says, ‘Okay, let’s get an intern in here,’ ” DiLorenzo says.  “But they don’t realize just calling them an intern doesn’t make them an intern.”

Under the Department of Labor’s Fair Labor Standards Act, six criteria have been instituted to define an unpaid intern.  They are as follows:

1.    The training, even though it includes actual operations of the facilities of the employers, is similar to that which would be given in a vocational school.
2.    The training is for the benefit of the student.
3.    The student does not displace a regular employee, but works under the close observation of a regular employee or supervisor.
4.    The employer provides the training and derives no immediate advantage from the activities of the student; and on occasion, the operations may actually be impeded by the training.
5.    The student is not necessarily entitled to a job at the conclusion of the training period.
6.    The employer and the student understand that the student is not entitled to wages for the time spent training.

Of course, there are loopholes to each criterion.  To avoid being taken advantage of, university career service advisors generally agree that all unpaid interns should have a clearly defined supervisor and structured program for the duration of the internship.

Michael Deragisch, assistant director of employer relations at the University of Colorado, Boulder, says UCB has established a successful program for unpaid interns.  Each student and their employer has to fill out an internship learning plan, which clearly outlines who the supervisor is, the internship’s time frame, and most importantly, the planned training.

“There are a lot of grumblings from employers about completing the paperwork,” Deragisch says. “If the employer can’t sit down with a student and create a learning plan, they certainly aren’t going to have time to properly supervise students and give them a thorough learning experience.”

But not all students should sweat about parting with their weekly paycheck; unpaid internships are prevalent in certain industries more than others. The majority of unpaid interns can be traced to alluring media industries, or human services and nonprofit fields that simply can’t afford to pay their interns.   

That said, according to Bottner the following industries had the largest percentage of interns reporting their positions were unpaid: arts and entertainment, journalism, publishing, broadcasting, healthcare consulting, academia, local and state government, healthcare, nonprofits, and human services.  

While the more glamorous industries can afford to pay their interns, students’ demand for these internships prevents them from having to do so. “There’s a constant supply of students that are willing to work for free,” Bottner says, “and this is part of the problem.”

But Deragisch has another idea why these employers continue not to pay their interns.  “It’s businesses that are crafty and cheap,” he says.  “In other words, they are playing the system pretty well.  They know they are in the industries where students compete for full-time jobs, and by crafting their job announcements correctly they get away with it.”

The long-held argument is that unpaid interns are working to gain experience and make connections, without any monetary motivations.  However, a NACE study from 2008 stated students who are paid during their internship report having a more positive experience in general than those who aren't paid.  This is also reflected in BusinessWeek’s 2008 study of “50 Best Internships”; the top three, PriceWaterhouseCoopers, Ernst & Young, and Deloitte & Touche all paid their interns more than $20 an hour.  Of the top 50, only two internships were unpaid.

Moreover, critique sites are sprouting up over the web, through blogs like UnfairInternships.com and internship evaluating sites YouIntern.com and InternshipRatings.com.

As more and more universities require internships to be completed, DiLorenzo says legal boundaries will continue to be tested, such as what to do when an intern is sexually harassed at work, or hurt in an accident and needs worker’s compensation.

But for students, the advantages of being compensated for an internship are much more immediate.  

“I’ve had both an unpaid and paid internships,” says Frank Petrash, a junior at Drexel University. “Simply put, it’s much easier to enjoy life as a paid intern.”

How to make the best of an unpaid internship:

1) Give up your gourmet coffee.  Sure, you’re used to swiping your meal card and instantly having fresh coffee on mom and dad’s dime on campus, but is the vente iced skinny cinnamon dolce latte really necessary every day?

2) Look into stipends or scholarship funds provided by your college specifically for unpaid interns.  Many times colleges have funds available to help out qualifying students, you just have to apply.

3) Pack your lunch. It may bring back memories of the Gogurt and Dunkaroo days of your youth, but in all reality packing lunch is a great way to save money.

4)  Ask to intern only a few days a week.  If this is possible, look for a paying side job, like babysitting, waitressing, or yard work.

5) Inquire about whether your company reimburses interns for travel.  Sometimes companies are willing to pay for interns daily train or car fare to and from the office.

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