The Great Intern Debate

I’ve noticed quite a bit of talk on interns in the last year. I’ve even received some messages about people wanting to intern with me (truly flattered and I love the passion and hustle) and I’ve spoken in the somewhat secret ‘entrepreneur’ hallways about internships.

I’m for paying people. Even when it’s legal to have unpaid work, if they’re helping my business, bottom line, profits etc, I believe that at the least, time should be compensated! And quite simply, that’s the law. I won’t get into ethics, opinions or morals. It’s just the way the law is. If you’re genuinely giving someone training during their studies for a short period of time, a few hours a week – then bring on a special gift!

But these conversations still go on. I see plenty of posts about hiring interns, about utilizing interns for administration, bringing on board an intern instead of an assistant or about whether or not to pay interns a student wage. About accept people who ask to intern for you (tricky I know!). But to clear up most of the debates in our creative fields and online world here’s the take on interns as it stands.

I could sum up anything I’m about to say on the laws in one simple sentence.

An intern must be a burden to your business.

or in other words

If you are deriving benefit from the work, you must pay.

 

The US Law

 

From: Department of Labor

The following six criteria must be applied when making this determination:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the Act’s minimum wage and overtime provisions do not apply to the intern. 

A quote from the DoL goes as follows :

“If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law.”
Nancy J. Leppink, acting director of the department’s wage and hour division

 

The UK Law

 

The UK & EU have strict standards on internships and most people would not qualify as an intern.

An intern’s rights depend on their employment status. If an intern is classed as a worker, then they’re normally due the National Minimum Wage. Internships are sometimes called work placements or work experience. These terms have no legal status on their own.

An intern is entitled to the National Minimum Wage if they count as a worker. Employers can’t avoid paying the National Minimum Wage if it’s due by saying or stating that it doesn’t apply or making a written agreement saying someone isn’t a worker or that they’re a volunteer.

From the UK Government employee rights…

When interns aren’t due the National Minimum Wage:

Student internships

Students required to do an internship for less than 1 year as part of a UK-based further or higher education course aren’t entitled to the National Minimum Wage.

School work experience placements

Work experience students of compulsory school age, ie under 16, aren’t entitled to the minimum wage.

Voluntary workers

Workers aren’t entitled to the minimum wage if both of the following apply:

  • they’re working for a charity, voluntary organisation, associated fund raising body or a statutory body
  • they don’t get paid, except for limited benefits (eg reasonable travel or lunch expenses)

Work shadowing

The employer doesn’t have to pay the minimum wage if an internship only involves shadowing an employee, i.e. no work is carried out by the intern and they are only observing.

 

The Australian Law

 

Australia’s laws are a bit vaguer. It’s a question of determining if there is an employee relationship but nevertheless there are some good outlines.

Just as student placements in the other countries, Australia calls these vocational placements and they do not need to be paid if they are a mandatory part of the course.

Vocational placements

The Fair Work Act recognizes formal work experience arrangements that are a mandatory part of an education or training course. You can check out the site (use the references below this post) to see what qualifies as a vocational placement arrangement.

Work experience & internships

Unpaid work experience placements and internships that don’t meet the definition of a vocational placement can be lawful in some instances. To be lawful, businesses need to ensure that the intern or work experience participant is not an employee.

One key issue in determining whether an employment contract has been formed is whether the parties intended to create a legally binding employment relationship.

When assessing whether the parties intended to form a legally binding employment relationship some key indicators would be:

  • Purpose of the arrangement. Was it to provide work experience to the person or was it to get the person to do work to assist with the business outputs and productivity?
  • Length of time. Generally, the longer the period of placement, the more likely the person is an employee
  • The person’s obligations in the workplace. Although the person may do some productive activities during a placement, they are less likely to be considered an employee if there is no expectation or requirement of productivity in the workplace
  • Who benefits from the arrangement? The main benefit of a genuine work placement or internship should flow to the person doing the placement. If a business is gaining a significant benefit as a result of engaging the person, this may indicate an employment relationship has been formed. Unpaid work experience programs are less likely to involve employment if they are primarily observational
  • Was the placement entered into through a university or vocational training organisation program? If so, then it is unlikely that an employment relationship exists.

If that seems somewhat vague the fair work website has a good example that applies to a lot of entrepreneurs, small businesses, online workers etc that wish to hire these kinds of ‘interns’:

Stuart recently completed a Bachelor of Journalism and is looking for work as a journalist. Stuart responds to an advertisement to write for his local paper on a full-time basis for 3 months as an ‘unpaid intern’ to try and gain experience and increase his chances of employment. Since Stuart had completed his degree and the placement was not a requirement of his course, it cannot be considered a vocational placement under the FW Act. The paper advises Stuart that he will be given specific tasks and deadlines to complete that will assist in the production of the paper and that this productive activity will take up the majority of his time. This suggests Stuart may have been engaged as an employee and entitled to remuneration.

Volunteering

A great deal of volunteer work is performed in the not-for-profit sector, which includes charity and community service organizations. People can offer their services voluntarily to assist in the not-for-profit organization goals. However, a business and person can’t simply characterize what is actually an employment relationship as volunteer work. All the relevant factors outlined above need to be considered.

Unpaid trials

Trial work involves a person performing work (or ‘trialling’) at a place of business. If this is at the request of the employer or it is expected that the person will be performing productive activities, the person would normally be an employee in these circumstances and entitled to be paid as such.

If a work experience placement or internship is used to determine a prospective employee’s suitability for a job, the person would be considered an employee for the trial period and should be paid as such. Similarly, probationary employees are paid for all hours worked.


I hope that clears things up!

References & Resources

Please note of course that I’m not providing you legal advice – you should check in with your lawyer or similar if you’re unsure about hiring an unpaid worker, or refer to your local labor department on correct wages.

US Department of Labor – Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act

UK Government – Employment rights for interns

Fair Work Act Australia – Interns, vocational placements & volunteering

NY Times – The unpaid intern, legal or not?

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