Should Unpaid Internships be Legal?

While there are lots of reasons that a person might agree to work for no money, they can be grouped into two big categories we will call the Noble and the Hopeful.  The Noble are your classic volunteers—they intern at the ACLU, UNICEF, or political campaigns—and they want to make the world a better place.  Since they don’t have any money they donate themselves.  On the other hand, the Hopeful want jobs—they intern for prestigious and often quite wealthy corporations, taking internships in the hope these will turn into real, paying jobs (or at least into resume lines that will help them get paying jobs).  Many, if not most, of the people in both groups are college graduates.

Noble interns are automatically exempt from federal minimum wage laws.  Hopeful interns, on the other hand must be paid at least minimum wage unless their internship meets the following criteria:

  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.

A cursory glance at this list should make it clear that it is more aspirational than a real reflection of the typical unpaid internship.  Under these guidelines any intern left to copy files, get coffee, or perform any of a hundred other routine clerical procedures would presumably be providing an advantage to the employer and thus entitled to minimum wage.  In spite of this, lawsuits against those employing unpaid interns are still rare enough to be big news.  This probably represents a sensible terror on the part of the hopefuls that they will alienate the very people they hope will give them jobs.  Hopefuls take unpaid internships in the first place because, in the present job market, they lack the bargaining power to demand paying work.

With that in mind, consider the preamble to a bill signed during another period of economic hardship—the Fair Labor Standards act of 1938 (FLSA), which gave us the minimum wage:

The Congress finds that the existence, in industries engaged in commerce or in the production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers (1) causes commerce and the channels and instrumentalities of commerce to be used to spread and perpetuate such labor conditions among the workers of the several States; (2) burdens commerce and the free flow of goods in commerce; (3) constitutes an unfair method of competition in commerce.

The FLSA does not seem like it would have an exception for the modern intern.  On the contrary, the unpaid intern seems to be exactly what the Act was designed to protect from.  There is no express exemption for unpaid interns anywhere in the act.  The six criteria above come from the 1945 Supreme Court Case, Walling vs. Portland Terminal, that is generally cited as the genesis of the unpaid intern exemption.  However, a close look at the case reveals that it does not deal very precisely with the modern intern’s situation.  The following language from the opinion is quite telling:

Many persons suffer from such physical handicaps, and many others have so little experience in particular vocations that they are unable to get and hold jobs at standard wages.  Consequently, to impose a minimum wage as to them might deprive them of all opportunity to secure work, thereby defeating one of the Act’s purposes, which was to increase opportunities for gainful employment.

Bear in mind, in the modern age we are largely talking about college graduates.

So, the question becomes: is the Hopeful intern more like the rule of the FLSA, or the exception in Walling?  Is a motivated and educated young person more akin to the normal worker of 1938, poorly treated because of the gross oversupply of workers, or is the Hopeful intern more like the totally unemployable trainee who warrants exception?  If the answer is the former, than unpaid internships are illegal.

Sound off in the comments.

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  1. I completely agree that under the current legal standards, unpaid internships should be illegal. As you rightly pointed out, the intern inevitably aids the company in some way and while the typical college graduate might lack in experience, it would be a stretch to include them under the exemption you quoted from Walling. However, your comment about how college graduates take these positions in hopes of receiving a real, paying job as a result is the explanation for why these unpaid internships exist. My assumption is that if employers were required to pay all of their interns, companies will be more reluctant to create these internship positions in the first place. While the interns who do get the remaining positions would be paid for their work, fewer college students and college graduates would gain the valuable experience from an internship that many of their future employers look for when considering the merits of an applicant. In short, while the law technically says that interns should be paid, I can see the benefits of non-enforcement of such a requirement.

  2. Zach,

    I gave this some thought and I think that i’m still anti-internship. The argument I have in my head is that if paying interns forced companies to drastically reduce the number of interns they take on, which is certainly plausible, then employers up the ladder would be unable to limit employment only to those with previous internships. The remaining students who received the paying internships would likely be more desirable, as any student with an extra award or credential probably is; but if the supply of such students dropped low enough, then employers would be unable to demand that all their employees come to them with gold stars from their internships. I’m don’t have an econ background so it’s possible i’m missing some factor that would effect that further premise, but if I’m right I see that as the more desirable result than just having everyone work for free before they get real jobs.
    This is especially the case given the fact that a system which practically requires free work to get the most coveted positions inherently favors wealthier students who can best afford to go without pay.

  3. I agree with Zach. It would be really great if every intern could get paid. But the reality is that businesses only have the resources to pay people who they see as an indispensable asset. An intern is a disposable commodity. It does not take unique experience and expertise to be able to copy files and perform routine clerical tasks. And it is my opinion that if the law mandated that interns should be paid for such work, most businesses would prefer to get rid of the internship programs and reassign such tasks to employees who are already on the payroll. This would be a disservice to many hopeful employees because they will be unable to get experience working in their desired industry and therefore they will have an even more difficult time getting a job than they already do in our current economic climate.

  4. Unpaid internships are an abuse. What is even more abusive are unpaid internships which employers only give to students receiving college credit, so that the student actually has to pay tuition to receive the unpaid internship. This should be illegal. Interns should be paid a market wage. If the market wage for the work performed is below the lawful minimum wage, then the interns are not getting industry relevant experience to enhance their resume and they might as well serve as Nobel volunteers.

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