Are Unpaid Internships Now Acceptable?

The U.S. Department of Labor (DOL) recently updated its internship fact sheet, in effect changing the guidelines for internships. The move has prompted many employers to wonder: Do we still have to pay interns?

Although the new guidelines give employers more leeway with regard to compensation, it would be a mistake to think your company should attempt to avoid paying college students and others who work as interns.

Nature of the Relationship

First of all, the revised DOL guidelines remain specific about the difference between work that has educational benefits and work that does not, in order to determine if a person is an employee or intern for the purpose of compensation.
The guidelines use phrases like “training that would be similar to that which would be given in an educational environment” and “beneficial learning.”
“The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar” is also a factor. If the position is ongoing, with set hours year round, it may not qualify as a nonpaying internship.
Similarly, the guidelines consider how “the intern’s work complements, rather than displaces, the work of paid employees.” In other words, if you’re relying on an intern to get the job done for free, you’re probably violating the guidelines.

Why Pay

You will definitely want to review the new guidelines, but you should do so from the standpoint of information, as opposed to trying to find a loophole.
There are many reasons to pay interns for the work they do. These include:

• Financial compensation provides incentive. If a person is paid, and paid fairly, he or she is more likely to view the work as a job.
• Financial compensation creates expectations. A salary is a transactional arrangement; a person receives it in exchange for work. The understanding is that if the person doesn’t perform well, the arrangement will be terminated and he or she will lose the income.
• Financial compensation creates a level playing field. An unpaid intern may sometimes be regarded a “just an intern” by staff members. A paid intern, on the other hand, is a person you hired; he or she becomes a coworker.
• Financial compensation allows for greater commitment on the part of the intern. Because the internship is a paying gig, the person doesn’t have to run off to another job in order to make money.
• Financial compensation speaks to your company’s values. Paying people who work for you, regardless of whether you technically “have to,” says you value everyone’s contribution.
• Financial compensation helps ensure that the intern has a positive experience. Your intern, like other staff members, becomes a spokesperson for your company. A positive employment experience will result in positive reviews—online and elsewhere.

It’s also worth remembering that you are competing with others for top talent. By pinching pennies, you may end up costing yourself a great intern.

Paula Santonocito, Contributing Editor for Recruiting Daily Advisor, is a business journalist specializing in employment issues. She is the author of more than 1,000 articles on a wide range of human resource and career topics, with an emphasis on recruiting and hiring. Her articles have been featured in many global and domestic publications and information outlets, referenced in academic and legal publications as well as books, and translated into several languages.