When I was in college, I accepted a selection of paid and unpaid internships. Back then exchanging the chance for pay in the interests of gaining valuable work experience was considered a fair (and legal) trade…and nobody looked too closely to see how much of the so-called "work experience" the unpaid intern was offered was legitimately "valuable." But today, the U.S. Department of Labor is beginning to take a different stance…and for good reason. Today, if the "internship" doesn’t meet a particular set of six specific criteria, then it may not only be unethical for an employer to offer it to you (or your daughter or son), but it may also place you at legal risk. Learn how to decide whether accepting an internship without pay is worth giving up income and the protection you’re entitled to as an employee under current U.S. federal workplace laws and rights.

6 Key internship criteria

The U.S. Department of Labor Wage and Hour Division has developed a set of six specific criteria against which a placement may be measured to determine if it’s a genuine internship (which provides true educational value in the intern's field) versus mere unpaid labor or volunteerism (which is only legal in a nonprofit setting).

  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.
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

The U.S. Department of Labor is very clear that internships which don’t meet these six criteria constitute instead an employer-employee relationship between the company and the intern. As such, under the Fair Labor Standards Act (FLSA) the employer is then legally obligated to pay the intern at least minimum wage plus overtime compensation (for any hours worked over 40 hours in one calendar week).

Takeaway: If you (or your son or daughter) are offered an unpaid internship which cannot meet the six criteria listed above, walk away...right away.

Can you afford an unpaid internship?

KCL is all about helping each of us save money—and making money when we can is very nice too! One aspect of paid versus unpaid internships that is rarely addressed head-on is the bottom-line financial impact that you—the intern—will bear should you decide to accept an unpaid internship, even if that internship is 100% legal, legit and genuine!

Consider these facts before accepting an unpaid internship:

  1. According to Marketplace.org and the National Association of Colleges and Employers, "…interns who get paid are almost twice as likely as their unpaid counterparts to get a job offer when they graduate."
  2. While you’re working for free (i.e. interning) you will still have to live. You’ll still have expenses—from housing to meals, tuition to fees, transportation to medical. Add up your average monthly living expenses, then multiply those expenses by the number of months your internship will last (typically 2-3 months). How are you planning to afford your unpaid internship?
  3. Interns who are working without pay in non-legitimate internships are placing themselves in voluntary legal jeopardy. This is because the legality/non-legality of unpaid internships can be very difficult to prove in court. Bringing in an intern versus an employee currently exempts the employer from having to provide fair wages and legal protection to that intern under the FLSA…so unethical employers will continue the practice so long as litigation in this area remains challenging.
  4. If you’re receiving college credit for completing an unpaid internship, you’re still paying for the tuition and fees associated with that class. So some legislators (and former interns) are now making the point that, as an intern, you’re not just "working for free"—but you’re literally "paying to work!" Can you afford to pay to add work experience to your resume?

Internship pay scales & benefits 

It’s easy to calculate what you’ll get paid if you accept an unpaid internship—nothing. But what can you expect to earn if you hold out for a paid internship instead? The National Association of Colleges and Employers' most recent survey is the 2013 National Internship and Co-Op Survey, which includes interesting data highlighting average hourly wages for paid internships.

Internship wages by the hour (as of 2013)

  • Internships at the bachelor’s degree level: $16.26/hour
    • Freshman-junior class level internships: $14.53/hour
    • Senior class level internships: $17.47/hour
  • Internships at the master's degree level: $21.90/hour

Also, nearly 80% of survey respondents (all of whom were employers that offered paid internships to students) stated they offered some level of benefits to their interns, including medical, paid vacation and (in about 50% of packages) stipends and/or relocation assistance.

A sample calculation

So let's say you’re a junior class level college internship candidate. You have been offered a part-time (20 hours/week), 12-week paid internship at $14.53/hour plus benefits (medical, paid vacation, sick leave). Here’s what you’ll earn during your internship.

$14.53 * 20 = $290.60 * 3 = $871.80 wages

As a college student, that extra $871.80 won't make you rich, but it sure can help make your college financial life smoother—and give you that extra confidence-building boost to ace that all-important job interview over competing candidates who may have opted for unpaid internships instead!

6 Things You Should Know Before Accepting an Unpaid Internship