The Problem with Unpaid Internships

A female intern carrying several to-go coffees in an office and appearing upset — © highwaystarz / Adobe Stock

In a time where talent is hard to come by and candidates are ghosting you up to the day they start their new job, hiring an unpaid intern can seem like the perfect fix. You get an eager new intern ready to gain experience in a real-world setting and they get college credit for their effort. Win-win, right? Maybe not.

As an employer, you either have to pay your interns at least minimum wage, or they must be receiving credit through a formalized program within their educational institution. Whether or not to pay an intern is a divisive topic, with proponents of the unpaid internship arguing that obtaining college credit is a good deal. Not only does the student gain valuable experience in their chosen field, but they also get credit for it. Some schools even require internships in certain degree programs in order to graduate, so your intern wouldn’t even be getting their degree without that internship.

The big question to consider is who can afford to spend hours at a part-time job without receiving any money for their time. In the U.S., they would have to be in the upper-middle class or higher, which would statistically make them white or Asian-American, leading to a profound lack of diversity in potential applicants, and therefore your workforce population.

Black and Latinx or Hispanic peoples are underrepresented in the American upper-middle class, representing only around 10% of the population each. Furthermore, college enrollment among 18 to 24 year-olds skews towards white and Asian races, with 42% of white young adults and 59% of Asian young adults attending post-secondary institutions, but only 36% and 37% of Hispanic and Black young adults, respectively.

What does this data mean in practical terms? It shows that your likelihood of hiring an intern that is Black or Hispanic is already significantly less than hiring a student of white or Asian ethnicity. When you add to that the knowledge that someone living below upper-middle class likely can’t afford to spend the hours at work not getting paid and still pay their bills, it further diminishes the probability you will be able to gather a diverse pool of candidates. Diversity matters, and studies show that companies that value and prioritize diversity actually do better than those that don’t. What’s more, this data hints that unpaid internships only reinforce the cycle of white, upper-middle class students getting opportunities that minority students can’t afford to take.

If you are determined to go the unpaid route, you should know that there are policies in place to make sure the experience is as valuable to the intern as possible and doesn’t benefit you more than them. The Fair Labor Standards Act (FLSA) has a 7-point checklist called the “primary beneficiary test” that is used to determine if the unpaid internship is truly in the best interest of the intern. You can find more information on the FLSA checklist here.

Regardless of whether you make your internship paid or not, you still have to decide what your intern will do for your company. There are guidelines for this as well! Hiring an intern is not about getting work done for free or on the cheap, but providing a valuable and enlightening experience for the student. The stereotype of the intern that only makes coffee runs and photocopies can lead right to a lawsuit, says Joshua Parkhurst of Cary Kane LLP. Furthermore, the work an intern does must complement (rather than replace) the efforts of full employees, must correspond to their academic calendar, and provide training that is useful to the intern’s course of study. It’s also a best practice to have your intern go through the same sexual harassment or other trainings required of your full employees.

Whether you want to draft an internship policy for your handbook or need help sourcing and screening a diverse pool of candidates, Skywalk Group is here to help. Our HR consultants are well versed in FLSA regulations and can help you make informed, ethical decisions about how to structure your internship so that everyone benefits. Then our sourcing and recruiting team can help you find the perfect candidate that will gain the most from the experience while providing a valuable skill set. Reach out today to learn more, no strings attached.

By Jessica Palmer