Beware Unpaid Internships!

For decades, internships have offered opportunities to learn new skills and find gainful employment. However, a rise in lawsuits involving unpaid interns and the companies where they worked has focused new attention on the subject. In an article on the topic, The Economist offered some information worth pondering:

“Banks and accountancy firms now hire more than half of their recruits through their internship programs; careers in politics, medicine, the media, and many other fields nearly always begin with an internship. Two-thirds of American students have at least one internship under their belts before they leave college. But they are often badly compensated: nearly half the internships in America are completely unpaid. How do unpaid internships exist in countries that have minimum-wage laws?”

In the UK, internships have been growing in popularity in recent years, particularly within industries such as journalism and fashion. In 2010, there were roughly 100,000 unpaid internships in the UK.

The House of Commons passed a Ten Minute Rule motion this year, banning unpaid internships by a massive 181 votes to 19.

The motion was brought forward by Conservative MP Alec Shelbrooke, who argued that unpaid internships disproportionately favoured the children of the wealthy and well-connected.

Shelbrooke said fellow members of the House of Commons had been complicit in the practice, with a wide range of MP’s advertising and taking on unpaid interns for extended periods of time. Shelbrooke’s motion said that unpaid work experience should last no longer than four weeks, after which time the worker would be classified as an intern and be entitled to the national minimum wage. The Conservative MP said the national minimum wage should put an end to the practice of unpaid labour.

It is a legal requirement here to pay interns who count as “workers,” a worker being someone who does regular work for an employer under a contract or some other agreement regardless of whether the work is called an ‘internship’, ‘work experience’ or otherwise.

In the US the internship laws are a little more specific and, according to the US Department of Labor, unpaid internships at profitable companies are permissible as long as they follow a certain criteria. However, some would suggest the criteria are more than a little nonsensical (see final bullet).

  • The internship must be similar to the training attained in an educational environment.
  • The intern is not to provide replacement or cover of regular employees, but should work under close supervision of existing staff.
  • The internship should benefit the intern, not the employer.
  • The intern’s role is both impermanent and unwaged.
  • And the most confusing point of all: the employer should not gain immediate advantage from the intern’s work and the company’s daily workload may even be hampered for the intern’s benefit.

The problem with this ruling is that if the company – by law – is not supposed to get anything out of hiring an unpaid intern, then why bother at all?

 
 
 

Lexington Wealth Management