Thursday, April 8, 2010

The NY Times on Unpaid Internships

The NY Times wrote an interesting article this week about the growth of unpaid internships which revisited the question what qualifies as an unpaid internship in the eyes of labor and employment law.

The first thing to note is that as a business owner, hiring staff of any kind requires a basic understanding of the relevant employment rules and regulations. For example: is a worker an employee or an independent contractor? What kind of insurance are you required to carry for full-time employees? What are the tax implications of taking on new employees? These are all questions that need to be answered when building your team, and the issues surrounding interns are no different. (And as a business owner, you’ve probably already figured out that your lawyer and your accountant are your BEST friends.) The current questions are around unpaid interns, so that’s what we’ll address here.

Let’s talk about what unpaid interns are NOT. They are not free labor who can be brought in to do lots of grunt work around your office. That, typically, is an assistant, who needs to be paid. (Could be part-time, but still needs to be paid.) They are not there to replace your entire staff so that you can cut your costs. That, among other things, sounds like you need a new HR plan.

Unpaid interns can be valuable additions to your team, but there is absolutely a give and get involved. You give training, you give supervision, and you give mentorship. You get assistance, you get the opportunity to teach, and you get to know your intern and evaluate if the role can develop into something more meaty. Essentially, you get a long, substantial interview.

As the NY Times article points out, the laws on this topic are murky. There are 6 federal legal criteria on the books defining the scope of unpaid internships, but the interpretation is lacking, largely because of a lack of enforcement activity on this front. But that may change as the job market comes back.

Our advice? Yes, ask your lawyer or a trusted advisor for some input if you have questions about your particular situation. But also, take a common sense approach to what makes sense for your business. As scrappy entrepreneurs, we like to save money when we can. But we also like to save time. If you hire someone unpaid and they NEED the money, their motivation will be to find a paid position, which means you’ll be back in the market looking for someone again before you can say “intern”. Also, let’s call it what it is—money motivates. If you’re on a tight deadline, have a huge new client you need help with, or generally expect someone to work above and beyond for you, you are looking for a new employee. And last but not least, just the word intern conjures up images of teaching moments and life-changing insight. If that’s up your alley, then yes, hiring an unpaid intern can make sense. But if you’re style is more “I needed it five minutes ago,” (and again, no shame in that - we all know the entrepreneurially clock is perpetually on fast forward) than call the position what it is—a J-O-B. Setting expectations correctly will lead to greater satisfaction for everyone involved.


  1. Great post on such an important topic. It's time for employers to end the practice of hiring "interns" for work that really deserves to be paid. Internships should be more formal mentoring programs, not a chance to get free labor.

    Lindsey Pollak

  2. In addition to the problems of some employers under paying and sometimes not paying interns at all, another problem that is widespread is the lack of conviction by both the employers and interns to transform their temporary relationship into one which is permanent. An internship which ends without an accepted offer for permanent employment is an internship which is a failure.

  3. This is post is dead-on. Our unpaid internship program comes with "open office hours" from me. Our interns can call anytime with questions about the industry, their career growth, etc. Also, each of them have weekly check-in meetings with me (which we track). Attendance is mandatory and it's a great way for me to get face time with the interns - and them with me.

    Far too many companies use interns as glorified servants and that's the fast track to having your corporate culture go down the toilet.

    Thanks, Urban Interns for pointing this stuff out!

  4. Although some employers may use interns as glorified servants, there are a great many more that offer priceless experience and information. As a business owner, there is MUCH to be valued in learning a business. The sheer fact that the business owner is taking the time to teach this individual is huge, when time for us is almost non-existent, especially in the start up stage. An entrepreneur understands the value in what is being taught, not necessarily with what is being paid. If the intern is genuinely learning and can take that same information and capitalize on it in the future, PARTICULARLY in a down market where jobs are scarce and new money-making avenues need to be sough out, the $8 an hour is a joke, in fact- an INSULT, in comparison to what they WILL gain through appropriate application of great information. If the intern is learning a business with no capital investment of their own and they are complaining because they are not making $8 an hour, I do not want them on my staff. Their negativity and inability to see the value in what is being taught is toxic. And, they are not working for free; they are working for knowledge. It is time for new ways of thinking. I challenge interns to find worthwhile internships, not to simply place on their resume hoping some employer will like them, but to take that knowledge and transform their reality. Check out my blog at to learn more.