Navigating the World of Unpaid Internships: Opportunities and Considerations
Internships serve as a vital bridge connecting college education with real-world career experiences. They offer students invaluable opportunities to gain practical skills, explore potential career paths, and build professional networks. While many internships are paid, unpaid internships remain a significant part of the landscape. This article aims to provide a comprehensive overview of unpaid internships, addressing their benefits, drawbacks, legal considerations, and strategies for finding them.
The Role of Internships in Career Development
Internships have become one of the most effective recruiting tools employers use to identify and hire early-career college graduates. Employers see a greater return on investment (ROI) from internships as a recruiting strategy compared to career fairs, on-campus visits, on-campus panels, or other activities. Internship experience is often the deciding factor when employers are evaluating two otherwise equivalent candidates. NACE’s annual survey of internship employers has consistently found that 50% to 60% of eligible interns convert to full-time employees. Converted interns offer significant additional benefits for employers. These employees are much quicker to onboard and train because they have already gone through many of those processes during their internship. Also, converted interns stay at their job longer after their first year on the job compared to non-intern employees.
The Complexities of Unpaid Internships
While internships provide a critical link to launching careers, unpaid internships are problematic for many reasons. NACE research has found that students who take part in paid internships receive more job offers and garner higher starting salaries than those who participate in unpaid internships. Also, paid interns are offered higher starting pay.
Particularly troubling, NACE research has also found that all college students are not equitably represented in internships. White, male, and continuing generation students are disproportionally overrepresented in paid internships.
Unpaid internships are a barrier to achieving equity and opportunity for all college students. Participating in an unpaid internship is much harder, and often impossible, for students who cannot forgo a paycheck for a significant period. As such, these students can access work experience, skill development, and networks that less privileged students cannot. The bifurcation of paid and unpaid internship opportunities causes a disparate impact on student outcomes and furthers systemic inequities. These students then go on to receive more job offers and higher starting salaries, which perpetuates and exacerbates the disparate impact over time.
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Unpaid internships deny basic labor rights provided to paid interns, including protection from harassment and discrimination. Not compensating interns communicates to them and their organizational colleagues that their contributions are somehow less valuable than the work of paid interns, to which unpaid internships directly contribute.
Legal Framework: The Fair Labor Standards Act (FLSA) and the Primary Beneficiary Test
The Fair Labor Standards Act (FLSA) generally requires employers to pay employees for their work. However, the FLSA provides certain exceptions. For instance, the FLSA exempts certain people who volunteer to perform services for a state or local government agency or who volunteer for humanitarian purposes for non-profit food banks. WHD also recognizes an exception for individuals who volunteer their time, freely and without anticipation of compensation, for religious, charitable, civic, or humanitarian purposes to non-profit organizations.
To determine whether an intern or student is, in fact, an employee under the FLSA, courts have used the “primary beneficiary test.” In short, this test allows courts to examine the “economic reality” of the intern-employer relationship to determine which party is the “primary beneficiary” of the relationship.
Courts have described the “primary beneficiary test” as a flexible test, and no single factor is determinative. If analysis of these circumstances reveals that an intern or student is actually an employee, then he or she is entitled to both minimum wage and overtime pay under the FLSA.
Navigating Unpaid Internships as an International Student
In most situations, you will require some type of employment authorization to gain experience in your field of study. It is understandable that you might think that if you accept work for which you will not get paid it is not considered employment, and therefore does not require authorization. If you are receiving any type of compensation, or the prospective position does not meet the unpaid internship criteria, you must obtain work permission (CPT, OPT, AT) if eligible. Department of Labor defines volunteering as donating time with an organization whose primary purpose is civic, charitable, or humanitarian in nature. You are not required to obtain work authorization to engage in an unpaid internship that meets all the criteria.
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Practical Steps Before Starting an Unpaid Internship
Ask in advance what paperwork the organization requires from you to start your unpaid internship. If they want you to complete an I-9 Employment Authorization Verification form, it means they consider it to be an employment relationship requiring authorization even if you are not being paid. The ISSO can authorize Curricular Practical Training (CPT) for both paid and unpaid positions.
A Call to Action for Equitable Internships
To provide all participating internship students with equitable access to opportunities and career success, we advocate that all internships should be paid. We advocate for legislation to eliminate unpaid internships and provide support for employers in converting unpaid internships to paid internships. Congress should pass legislation requiring internships to be paid. Modern legislation is needed to resolve this inconsistency. The Primary Beneficiary Test requires employers to exercise broad discretion and judgment in determining whether interns should be paid. Where judgment and discretion are used, mistakes can and will be made, or more troubling, employers will intentionally classify an individual as an unpaid intern simply to save money. Students, institutions of higher education, employers, and the economy will all benefit from interns being paid, and legislation is needed to make it so.
In addition to legislation, policy makers should provide increased financial and other support to smaller, for-profit, and nonprofit organizations for them to provide paid internships. Many unpaid internships reside largely with smaller for-profit companies and nonprofit organizations. This support could take the form, for example, of increased funding support for existing workforce and education legislation programs. NACE encourages the government agencies that oversee these funding streams to provide detailed guidance to help facilitate this usage along with increased investments to support paid internships. If an employer cannot afford to pay an intern, they could access these various funding streams.
Until legislation exists requiring internships be paid, Congress should immediately pass the Federal Intern Protection Act to extend legal protections to unpaid interns in the federal government. States should pass legislation to prohibit discrimination against unpaid interns in the private sector as well. These laws could serve as models for other states and the federal government.
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