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Unpaid and Paid Internships: Unpaid Internships May Become Illegal In The Future

Judge William H. Pauley authored a six-point test to help the Department of Labor determine whether or not an individual can work for free.

(Media Bistro)
(Media Bistro)
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Most college students are expected to land an internship before graduation, and by this time, companies are looking for well-rounded individuals who have similar job experience before applying.

Now, when applying for an entry level position, an internship is usually the main component to securing a job right after college. Students who are interning with different companies usually have two internship options: a paid or an unpaid internship. Normally, paid internships are highly selective and competitive considering the company wants to make sure that their money is being spent wisely, whereas an unpaid internship is more lenient than a paid internship.

Moreover, many unpaid internships “pay” their interns with valuable work experience in the place of money while paid internships give students tangible work experience and a financial incentive to perform exceptionally.  The unpaid intern has become the victim of public scrutiny and in some extreme cases, unpaid interns are taken advantage of and are forced to perform menial tasks such as getting coffee for employees, faxing papers, and other irrelevant activities.

(Employer Blog)

(Employer Blog)

William H. Pauley III, a federal district judge in Manhattan, officially made unpaid internships illegal in New York. For many, this is the first time the law has intervened and definitively said “no” to unpaid internships. Judge Pauley authored a six-point test to help the Department of Labor determine whether or not an individual can work for free:

The Test For Unpaid Interns

There are some circumstances under which individuals who participate in “for-profit” private sector internships or training programs may do so without compensation.  The Supreme Court has held that the term “suffer or permit to work” cannot be interpreted so as to make a person whose work serves only his or her own interest an employee of another who provides aid or instruction.  This may apply to interns who receive training for their own educational benefit if the training meets certain criteria.  The determination of whether an internship or training program meets this exclusion depends upon all of the facts and circumstances of each such program.

The following six criteria must be applied when making this determination:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the Act’s minimum wage and overtime provisions do not apply to the intern.  This exclusion from the definition of employment is necessarily quite narrow because the FLSA’s definition of “employ” is very broad.  Some of the most commonly discussed factors for “for-profit” private sector internship programs are considered below.

Depending on your needs, you will be able to determine if an unpaid or paid internship is the right one for you! However, now that there is a law defining the parameters for companies to “hire” unpaid interns, the likelihood of students falling victim to menial jobs will hopefully decrease.


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Brittany Dawson is a junior English major with a cognate in Secondary Education at the University of South Carolina. Although she is pursuing a career in the field of academia, Brittany’s current internship with the Urban Twist allows her to explicate her passion and appreciation for writing.

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