If we consider the Marxian view about capitalism, labor is one of the commodities that can be bought and sold in the market. Workers generally get a salary or wages, in other words, in exchange for the particular burden of labor. So, here the question arises, how something like an unpaid internship could exist in this capitalist system. And with this, some question arises,
- Are unpaid internships legal?
- Why are unpaid internships legal?
The college students are ready to pay any cost in order to launch their careers and search “paid internships near me.” You may find it a no-brainer. But before reaching a conclusion, we should consider what they are thinking about this. For them, they are not selling their labor without any wages or salary while they are doing an unpaid internship. With the price of their labor, they are buying work experiences, and this is what they consider an unpaid internship.
Some Real Examples
There are plenty of companies that are taking advantage of this demand, and CBD’R US, an online retailer of cannabinoid products, is one of them. This Anaheim, California-based company started hiring interns on an unpaid basis around three years ago.
The Chief Executive Officer of CBD’R has stated that they found it beneficial for both the interns and themselves. He also added that they offer their interns the opportunity to learn how small businesses are being operated. At the same time, the interns provide their social media insights and keep the younger demographics engaged with their content.
A Georgia-based solopreneur, Kristi Porter, is the person behind a copywriting agency named Signify. She also said that her overall experience in the unpaid internship program was a positive one. She mentioned that as she only needs five hours per week, it was unpaid.
All the interns were agreed with the arrangements and also had a great time with a lot of learning; this is what Porter believes. Being a solopreneur, she thinks that getting other’s insights and opinions are great at times.
Through their internship, both the companies, Signify and CBD’R, offered vocational or academic credit to the interns.
Porter also said that though she did not give any class credit, none of the interns had talked with her regarding this. So it is much clear that they always wanted only the work experiences.
It can be too easy for small businesses to forget their legal, due diligence as there are a lot of college students lining up in order to work for free. Many company heads with good intentions will be surprised to know that the off-the-book internships that they are providing are actually breaking the labor rules.
Are Unpaid Internships Legal?
As per the Fair Labour Standard Act of 1938, all employees of a for-profit company have to be paid for their work. However, under the same Fair Labour Standard Act, interns are not at all considered as employees.
So, Are Unpaid Internships Legal? If it is a yes-no question, the answer is “Yes.” But, there is a condition and that is as long as the intern is the “Primary beneficiary” of the particular work arrangement. The answer will not be yes if the employer would become the “primary beneficiary.” Due to the subjectivity of this question, it is becoming so difficult.
The employers and interns may have totally different views on who is being benefited the most in this arrangement. And apart from this, many states have different regulations for this, and for employers, the cost sometimes can overweigh the actual benefits.
And in order to address the particular subjectivity, the DOL has created the “Primary beneficiary test” for ensuring that an intern is getting more benefit than an employer while doing an unpaid internship.
Primary Beneficiary Test
So, the question “Are Unpaid Internships Legal?” is still confusing and complicated. So, the Department of Labor addresses this particular question along with the seven-part Primary Beneficiary test, which is flexible enough. It is updated in 2018 from the more rigid six-point test.
Here is a note that this Primary beneficiary test is for only for-profit organizations. In fact, for non-profit organizations and public sectors, these rules do not apply at all.
Here are the seven points of the Primary Beneficiary Test,
- The interns would be aware that they will be totally uncompensated.
- The given training should be comparable to the training that is provided at an educational institute.
- The internship program should be tied to the particular intern’s on-going or current educational program along with academic credit.
- The internship program should accommodate the particular intern’s academic calendar.
- The internship should be limited to the exact period during which of the following all the interns get beneficial learning.
- The work that the intern will do can complement the work of an existing employee and not replace it and at the same time providing beneficial learning.
- Make it clear that the internship will not be provided any kind of entitlement to a job after the completion of the internship program.
In simple words, those unpaid internships that are legal are rarely profitable, and those internships that are profitable are rarely legal. However, the center of this Venn diagram still may provoke moral dilemmas. It is true that you may not have to pay salary or wages, but the cost will be sustained somewhere else.
It is like there is nothing such as free dinner, so there is also no free intern who will fetch you the dinner.