Should You Pay Your Interns?

Unpaid internships are a hot topic right now because businesses across the country are re-evaluating their internship programs in the context of legal requirements, educational benefits and company needs. Should you pay your interns or continue to offer unpaid internships? Ultimately, the decision comes down to whether your internship program meets the specific criteria that allow interns to remain unpaid.

The rules and requirements that allow your company to offer an unpaid internship program are simple. First, your interns cannot displace regular employees. If you lay off staff and hire unpaid interns, you are violating the Fair Labor Standards Act. Second, your interns must be directly supervised by company employees. Third, your internship must provide training similar to that which someone might receive in an educational setting or on a job training program. However, you cannot use an internship program as a way to test or train future employees.

The most important rule involves the activities your interns perform while in your internship program. The U.S. Department of Labor states that an employer offering an unpaid internship cannot receive any immediate advantage from the intern. This includes asking an intern to perform administrative work such as filing and photocopying. Legally, once an intern begins performing productive work that benefits the employer, the intern must receive at least minimum wage.

Many businesses ignore or overlook this rule. However, interns are starting to push back against unpaid internships that require significant administrative work or are structured like entry-level jobs. Recently, interns have sued major companies such as Condé Nast and Fox Searchlight Pictures for offering unpaid internships that should have been paid positions.

Choosing to pay your interns, especially if you rely on intern labor to perform basic administrative tasks, is always the best option. If your current internship program legally requires you to offer payment but your company does not have the budget to pay interns, consider redesigning your internship program to fit the criteria for unpaid internships.

A true unpaid internship program often functions such as job shadowing or an educational program. During this internship program, interns have the opportunity to meet staff members and learn about the day-to-day work that those employees perform for the organization. Interns may create sample projects that relate to the company's work, such as creating a mock website layout, but the company cannot use those projects in its actual business operations.

To understand whether your company should pay interns or offer unpaid internships, read the U.S. Department of Labor's rules on unpaid internships carefully. Many businesses offer unpaid internships that legally should be paid positions. By understanding when you can offer unpaid internships and when you should pay interns, you are in a better position to help your company make the right choice.

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