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Regulators Investigating Unpaid Internships 182

Posted by kdawson
from the slave-by-any-other-name dept.
theodp writes "With job openings scarce for young people, the number of unpaid internships has climbed in recent years, leading federal and state regulators to worry that more employers are illegally using such internships for free labor. Convinced that many unpaid internships violate minimum wage laws, officials in Oregon, California, and other states have begun investigations and fined employers. '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,' said the acting director of the US Deptartment of Labor's wage and hour division."
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Regulators Investigating Unpaid Internships

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  • by Skyshadow (508) * on Saturday April 03, 2010 @01:45PM (#31717640) Homepage

    I believe that internships are important. I was an intern at SGI back in the late '90s, and I still frequently think back to the things I learned working there and applying those lessons to my current career.

    That established, I can also say without hesitation that tech internships aren't like apprenticeships -- you're generally not learning the skills you need to do a given job, but rather applying the skills you've already amassed.

    Really, the benefit of internships is twofold: You learn how to operate in an environment where you're not simply taking instructions (like you would working a job at Subway or mowing lawns or answering support calls, the typical menial jobs you can get before college) but rather participating in the job and dealing with peers, managers, HR twits, etc. Second, and related to this, you're doing it to get it on your resume, proving that you've already been through the learning curve.

    So getting back to my initial point, while an intern obviously may not be as effective as a 'regular' employee, interns are still generally 'earning their keep' from Day 1 by producing value for the company.

    A critical part of any internship, then, ought to be learning to value your skills, to get an idea of what your services are worth. And unpaid internship, while still better than nothing, skips this lesson, and it really is a key one -- I know people who are 15 years into their career and still unable to realize they're wasting their time in a given position or with a particular employer.

    • by FooAtWFU (699187) on Saturday April 03, 2010 @01:51PM (#31717704) Homepage
      Yeah.... a minimum wage of $7.50/hr or whatever California charges these days should not be a big deal for a software-related company, especially next to what they have to pay full-time employees. Heck, IBM was paying me $18.75/hr for an internship right after my sophomore year of college.
      • "Yeah.... a minimum wage of $7.50/hr or whatever California charges these days should not be a big deal for a software-related company, especially next to what they have to pay full-time employees. Heck, IBM was paying me $18.75/hr for an internship right after my sophomore year of college.
        --"

        The real cost after medicare, SSI, medical, and other head taxes would bring that number close to $25/hr. At that price IBM can buy someone in India for cheaper than your intern rates who has years of experience.

        IBM is

    • by jeko (179919) on Saturday April 03, 2010 @02:14PM (#31717900)

      Read the article. I understand -- and my experience was -- that interns as currently used are basically workers in all but name.

      However, the federal definition of an intern is that they DON'T produce value for a company. "Internships" are basically supposed to be charitable positions. Companies are supposed to be able to provide in detail the learning program of the interns they are supposed to be TEACHING, not exploiting. The company is expected to LOSE money on an internship, hence the tax breaks they're given.

      The facy that most companies work interns like employees is basically half a step up from child labor, akin to a high school teacher who sleeps with one of their students the day she turns 18. Even if you manage to skirt the rules -- which really you don't -- it's still pretty repugnant.

      • With states cutting teaching jobs the new teaching interns are great! Free labor!

        In places like California many senior teachers are being laid off and replaced by interns because they are free and make the accountants happy.

        Not all internships are created to help university students. Most are created because no real talent can be found and are willing to train someone who is willing to work for dirt cheap until they feel he or she is qualified to do the job for a living salary later.

        I substitute teach now b

    • I agree, interns should always be paid. I find it interesting the same debate is happening over the other side of the pond in the UK. My union, BECTU, who represent film, television, entertainment and theatre technicians want an end to unpaid internship/work experience. They also want to stop indie film makers asking for work for free because they can't afford to pay anybody.

      I work in film production usually as a sound assistant or trainee. I have a degree and have some experience, and I'm at a point in my

    • "interns are still generally 'earning their keep' from Day 1 by producing value for the company."

      Did you read the article? This is completely illegal. The entire point is that internships are to gain experience and education, NOT to serve as employees. If they're producing value for the company then they deserve to, and by law must, be paid.
  • by Anonymous Coward on Saturday April 03, 2010 @01:47PM (#31717652)

    I don't see this too much in the tech industry, but I saw a lot of it going on in the entertainment industry. Los Angeles is a really creepy city that exploits innocent and not-so-wise young people who want to make it big. This is going to hit that city like a brick in the face.

    • by JustOK (667959) on Saturday April 03, 2010 @01:49PM (#31717672) Journal

      they'll probably make a movie about it.

    • by QRDeNameland (873957) on Saturday April 03, 2010 @02:19PM (#31717948)

      I don't see this too much in the tech industry, but I saw a lot of it going on in the entertainment industry. Los Angeles is a really creepy city that exploits innocent and not-so-wise young people who want to make it big. This is going to hit that city like a brick in the face.

      Most "normal" industries/professions like tech have paid internships to perform good functions (at least on paper) for that business, to develop a future labor pool while giving an employer cheap yet motivated temporary help.

      It is generally "elitist professions" like government/politics and media where the *unpaid* internships are prevalent, and they are definitely a "paying your dues" process. And as is touched on briefly in the article, this system gives the wealthier kids a distinct edge in these fields, as they are far more likely to be in a position to be able to afford working for no pay.

      • by Lally Singh (3427)

        It is generally "elitist professions" like government/politics and media where the *unpaid* internships are prevalent, and they are definitely a "paying your dues" process. And as is touched on briefly in the article, this system gives the wealthier kids a distinct edge in these fields, as they are far more likely to be in a position to be able to afford working for no pay.

        How much of it is due to the fact that tech builds an innate hierarchy ordered by skill level, while some other professions only have so

    • by musicalmicah (1532521) on Saturday April 03, 2010 @02:50PM (#31718212)

      This is going to hit that city like a brick in the face.

      I don't think it will. These interns are hard to find by regulators, and when you do find them, they generally don't want to step on any toes. In my experience, interns that are willing to stick up for themselves leave within the first few days. The ones that get suckered into doing menial labor for a year tend to avoid badmouthing their first "employer."

  • by mgkimsal2 (200677) on Saturday April 03, 2010 @01:48PM (#31717664) Homepage

    Really... never understood it. I get the idea of working 'cheap' to gain experience, and I understand volunteering. I also have offered to work at some places for a short time (week or so) to get a feel for the place. But I've never understood applying to ask to be considered to be approved to then go spend months of my life working for a company which is in the business of making a profit. I guess I never travelled in those sorts of circles where unpaid internships led to high-paying positions of immense money and power, which is why so many people would be lining up to do them.

    If anyone would care to engage in some unpaid internships for me, let me know.

    • by Rivalz (1431453) on Saturday April 03, 2010 @01:54PM (#31717724)

      Some people even go as far to pay for education. And the best education is on the job training. Not to mention rubbing elbows with other people in the field.

      I think it is a horrible practice and that any work needs to be compensated but I at least see the reasoning behind it.

      • by joggle (594025)

        The reasoning is simple. If you are working for a for-profit company and you are unpaid, you are meant to receive the following as compensation:

        1) experience
        2) something of educational value in your field (you usually get college credit based on this assumption)

        The company is legally bound to not use you as a replacement for paid labor (goes back to a Supreme Court decision from 1947).

        However, all too often all three fail to materialize. You don't get any worthwhile experience since you spend your time doin

        • As an intern, I was not paid. I did learn a lot of practical things I would not otherwise have learned and I got something useful to have on my resume that helped me get a better job when I graduated.

          Before today, I had never heard of interns being paid - unless the internship was part of a fellowship.

          • I did 3 or 4 internships. All paid, all software related. All produced meaningful work and value for the company. In some cases the work was meaningless to me and my profession; in others, it was equivalent of a senior software developer yielding big income for the company. Companies ranged from non-profit to start-ups to big established companies. In no cases was I heavily supervised, in all cases I was expected to hold my own weight with the rest of the professional workers, asking questions as needed, et
  • by Mark_in_Brazil (537925) on Saturday April 03, 2010 @01:49PM (#31717682)

    Unpaid internships are also an easy wayo make sure that only "the right people" (i.e., people from wealthy families) have a chance to get into certain fields. In some fields, it's hard to get hired without experience, and the only way to get the initial experience is through an internship. But there are a lot of people who can't afford to work without any income, so if only unpaid internships are available, only those lucky enough to have been born into wealth can break into those fields.

    • by fermion (181285) on Saturday April 03, 2010 @02:21PM (#31717966) Homepage Journal
      To a point I agree with you. A wealthy person can easily take an unpaid internship. A wealthy person can also sit around and work at Starbuck's living off their trust fund. Or can just live a modest life off their trust fund without working. Such things do happen.

      Sometimes the only way in for a person that was not born into a situation is through an unpaid internship or a low paid contract position, both of which are being limited to corporate abuse. This does not mean that they are useless, or that such deal is bad for a person who is not upper class.

      For instance I volunteered my software development services in high school. It gave me experience writing production code, and every week there was a list of bugs and new features. This lead to some low paid positions, which lead to higher paid positions. I would have more money working at fast food, but that would not have taught me the skills I now use. Did I have to give up a lot to make this happen? Sure. Did my family have to sacrifice? Absolutely. I look at kids with thier $400 tennis shoes and their $300 media players and their cars,and know that thye deserve it because they work 30 hours a week after school for it. But what are they learning? To maximize short term profit? That sacrifice is worthless? What ever happened to dream that if we work had and sacrifice now, and get our degrees in math or science or engineering, the world will open up to us in the future. Now it is like if I can't buy my pair of Nikes,or my iPod, or upgrade my hard drive, life just is not worth living.

      • If a high school student can afford all that stuff working 30 hrs/week at minimum wage, they must be spending a lot more years there than I did.

      • by Caraig (186934) *

        What ever happened to dream that if we work had and sacrifice now, and get our degrees in math or science or engineering, the world will open up to us in the future.

        The social contract, between people and corporations, was broken. I'm not entirely sure when, but sometime in the 90's, 'serial eployment' -- people bouncing from one job to the next -- became the norm. There was no longer any advantage or benefit to staying at a company for 20+, 30+ years. Besides, companies would drop you in a moment if it

    • Re: (Score:2, Informative)

      by Godskitchen (1017786)
      Some kids take loans out to not work during university. If they *really* wanted to break into the fields you are referring to, couldn't they they just live on loans for another year or two while they acquire the initial experience?
      • What bank gives out unsecured loans to fund internships? Even in an alternate universe where this were possible people from lower-income backgrounds would hesitate because failure would be devastating. A lot of rich families are pretty stingy with cash, but the kids don't have to worry about being homeless if they fail at something, and know that their parents will probably pay off any loans or buy them a house if they succeed.
        • What bank gives out unsecured loans to fund internships? Even in an alternate universe where this were possible people from lower-income backgrounds would hesitate because failure would be devastating. A lot of rich families are pretty stingy with cash, but the kids don't have to worry about being homeless if they fail at something, and know that their parents will probably pay off any loans or buy them a house if they succeed.

          Wachovia? Washington Mutual? Oh wait...never mind.

  • So employers will now apply the obvious solution and pay them exactly the state's minimum wage if they're found to be violating the law with unpaid internships.
    • by tsotha (720379)

      More likely they'll just eliminate the position entirely. We've never had unpaid interns, but even without pay the interns we've had would have been a net loss for the company. They take far more effort to manage than ordinary employees, they're a distraction on your top performers, and much of what they do has to be reworked anyway.

      In our case we brought in interns because during the boom it was difficult to find people, so if you could get someone in, say, between their junior and senior year in colleg

      • Sure, that's right now. It won't last and you know it. The stat I heard from a previous employer was that the median cost to hire a good software dev is around $12k. This means that if you were to hire then as a paid intern for about $4k+2k of benefits, having half come back as employees would cost justify the program relative to the normal process. Of course, the numbers don't quite work out, but the idea is not to make money, but to fill a social obligation - how else do you expect to get skilled workers?
  • by jeko (179919) on Saturday April 03, 2010 @02:01PM (#31717806)

    Read the article. The companies were fined a small fraction of what the intern's wages would have been. It's as if the penalty for robbing a bank was that you'd have to give back twenty percent of the take, and then, only for the times that you were actually found guilty at trial.

    Such "enforcement" is worse than none at all. At least if no company were caught and "punished," there might still be the risk of real penalty in the future. Now, the companies know for a fact that IF they're caught, the penalty will only be a fraction of what they owed anyway.

    Imagine if the IRS came to you and said, "If we catch you cheating on your taxes, you can be assured we'll make you pay a fifth of what you owe."

    • Re: (Score:2, Insightful)

      by maxxxx (1782342)
      That's pretty much how most settlements work. Look at the fines companies have to pay to the SEC. They don't admit any wrongdoing and often settle for less than they made through fraud.
  • Plus (Score:3, Interesting)

    by sonicmerlin (1505111) on Saturday April 03, 2010 @02:05PM (#31717820)

    This is a good issue for government to investigate, as obviously interns can't exactly speak out publicly about their lack of pay without suffering a loss of employment.

    Also salaried interns means more taxes for government... so there's always that incentive.

  • by Joe The Dragon (967727) on Saturday April 03, 2010 @02:07PM (#31717834)

    Do they even get workers comp if they get hurt? or are they not workers and just get pushed to the side?

    • Re: (Score:3, Informative)

      by dbIII (701233)
      In Australia they wouldn't which is one reason unpaid interships for commercial enterprises are illegal.
    • by Trepidity (597)

      They probably would if they were injured and filed for it--- most employment laws, like worker's comp, are based on whether the overall character of the position was of an employment-type relationship (i.e. you go into a worksite during regular hours, have something to do for the company, have a boss, etc.). Most of these unpaid interns are probably legally employees, despite the company's illegal classification of them otherwise, and if they got injured, the company would likely be on the hook.

    • At least the company I interned for had some kind of coverage for interns in case of work place injury.

  • by Joe The Dragon (967727) on Saturday April 03, 2010 @02:09PM (#31717862)

    college sports players are the same and need to be payed for playing and not taking way crap / no work fake job in the school book store / school library.

    • by Khyber (864651)

      College sports players do NOT need to be paid. WTF are yo talking about? They PAY to go to college or some scholarship/grant does - you think the college is going to pay them? Hell no! They're playing football in the hopes of making it pro where they will get paid.

      Until then, they're at school to learn, not get paid.

      • by tepples (727027)
        Of course they get paid to go to college, at least in NCAA Division I. Student athletes get full ride scholarships disturbingly often.
    • Re: (Score:3, Informative)

      by RabidRabb1t (1668946)
      College sports players are paid. Many receive free tuition, housing, and food. Some even get stipends for "academics." They get free tutoring that isn't available to the other students.
    • by indytx (825419)

      college sports players are the same and need to be paid for playing . . . .

      Fixed that for you.

      Seriously, how is this the same? College athletes are paid. They're paid with an education, and the cost of that education can be stratospheric. Take Duke, a big time basketball school in the Final Four. Tuition and fees, room and board, and other expenses add up to over $53,000 PER YEAR. http://www.admissions.duke.edu/jump/applying/finaid.html [duke.edu] As another example, TCU, a big time football school, has annual costs of over $41,000. http://www.fam.tcu.edu/cost.asp [tcu.edu] How may 18 year old

    • by couchslug (175151)

      They should be hired by the college the way sponsors hire NASCAR drivers.

      The nonsense about athletics being an appropriate part of higher education instead of entertainment for alumni and a way to separate fans from their money discarded. Let the jocks earn straight cash, and the smart ones can go to school by paying for it.

  • Glad to. (Score:5, Interesting)

    by Aladrin (926209) on Saturday April 03, 2010 @02:17PM (#31717926)

    Back when I was trying to get my first programming job, I'd have been glad to take an unpaid internship to get the experience needed for my resume to get looked at.

    After a year and a half of having no job (okay, towards the end I was forced to take a job at a grocery store to pay the bills) I would have done just about anything to get a good job. I couldn't find any companies willing to take an intern or minimum wage employee to that experience. I finally landed an interview for a job that was way over my head and got the job. Luckily, I learn quickly.

    As for companies abusing it... The topic of this article is why they wouldn't take interns. They said they were afraid of this very thing. Companies are in a bad position with interns. They can't use them to make money, yet they suck money from the company while the company trains them. Why the hell would a company do that?

    I'd even take it a step further: If the intern isn't making the company any money, they aren't doing anything worthwhile... And if they aren't doing anything worthwhile, they aren't learning anything. Which defeats the entire point of being an intern in the first place.

    • Re:Glad to. (Score:5, Interesting)

      by Todd Knarr (15451) on Saturday April 03, 2010 @02:46PM (#31718174) Homepage

      Why would a company hire a paid intern? Just look at the complaints from hiring managers about the lack of qualified/skilled applicants. Typically an internship pays much less than the kind of position the person's interning for. By taking on the intern the company gets some work for much less than they'd otherwise have to pay, they get to find out whether this person's a good fit, and they provide the training they feel applicants would need for that kind of position. At the end they potentially have a trained candidate ready for a job, without having to go through the expense they'd have to to hire a regular employee and possibly have them not work out. And even if the intern doesn't work out for them, someone who interned at another company may show up with the training and experience needed for a position the company's hiring for, see the aforementioned complaints about lack of qualified candidates.

      Of course the companies would like to get all the benefits of having trained, qualified people on tap without having to do anything to get them. To me, though, that's like the times I hear executives going on about how they need to charge their customers as much as possible while keeping costs to a minimum, and then they turn around and complain about how their suppliers are trying to charge as much as possible while delivering goods that barely meet the minimum standards and having poor customer service. They simply don't get the connection.

      • by Trepidity (597)

        In tech at least, things don't seem to work out that way--- it's mostly sketchy companies that try to get unpaid interns, while all the reputable, successful companies pay their interns. And not only do they pay them, they pay them extremely well; a typical Google, Microsoft, or Intel intern gets in the range of $40/hr.

    • by Yold (473518)

      Initially an intern may cost the company money, but by the end of their internship they are probably making the company money. Interns do not get health insurance, 401K benefits, and are paid .3 to .5 of what a full-time employee is making. Some studies place estimates of bad-hires at 2x-3x their annual salary; so it also is a good way of recruiting new employees.

      I may have been in a different position than you, but there is no way in hell I would take an unpaid software development internship. If a compan

      • by tepples (727027)

        If a company doesn't think that your time is worth anything then what value could the experience possibly have? You would be better off working on your own programming projects; you'd probably learn a lot more because you wouldn't be confined to unpaid intern bitch-work.

        Some employers ignore personal open source projects on your resume. They want to see that you have contributed to profit.

  • This is a great example of harmful competition in market systems. Apprenticeships of various kinds are traditional and important, but when they fail to pay at least a living wage (be it medical or tech internships), they're unhealthy for society and often unhealthy for those involved. People who would enter such fields are at a huge disadvantage should they refuse to shoulder more debt to reach a nicely employable state, while the status quo is quite nice for those who don't need to pay a living wage.

    The ro

  • I go to Texas Tech; most of the employers at the job fair there do paid internships. Both the IT internships I've gotten were excellent pay, excellent experience.

    Unpaid internships are for when you don't have time to look up a well-paying one, or it's a company that's so badass you're willing to do free work.

  • by the Dragonweaver (460267) on Saturday April 03, 2010 @02:49PM (#31718204) Homepage

    One of my respected professors told us flat-out that if you can get paid for work, you should— applying for internships is very counter-productive. I can see the value in certain limited fields (such as animation, mentioned in the article) if they follow the specific rules laid out for under-paid or unpaid interns, but there is absolutely no reason it should spread to the general business community. And if students become convinced that internships are necessary, well, there's a cost savings for the employer with very little benefit to the worker.

    My first post-college job was a real job, and I'd had no internship experience prior to that, only good letters of reference from my professors and perhaps a dash of desperation on the part of my employer. But I'd rather work fast food than be an unpaid flunky for a job that didn't really need more than some basic training, which many of these things do. Internships should be left to those fields that demand a high level of immediate competence and inside knowledge, and the rest should be left to legitimate on-the-job training.

  • Boeing maybe an example of what good an Internship Programs should be like. I find their generosity to let those in college have a chance to participate in what Corporate Earth considers to be opportunities of specialized fields. These multinational corporations let students see first hand all they can be. Bravo Boeing, Bravo.
  • The IRS wants it cut and likely they should be getting min wage or more. Same thing for SS, FICA, Sate TAX, and more.

    • by Reziac (43301) *

      That's a damned good point... the higher the wages, the more tax dollars for the government to collect. So the gov't has a vested interest here.

  • I have a graduate degree and several years experience in my field and, like many others, am having difficulty finding work. I've had numerous people, including one or two professionals involved in hiring, tell me that that as a last resort in this economy I should offer companies my labor for free. Simply as a way to get my foot in the door, and if nothing else as a way to gain some more experience. Considering the amount of time, money and effort I've put into my education and work over the years I foun
  • Typically in the fall we'll take on a couple juniors as interns, unpaid, and have them work on opensource projects to see what they are made of and whether or not they'll fit in with the company. If they do, they spend their next 3 semesters as paid interns working on our products and usually have coded their way into a job when they graduate.

  • Companies should pay their interns, but at least in the State of Washington teaching students are required to do a year of student teaching which is unpaid/free. I guess the rules for the private world don't apply to the Government entities...
  • There is a paradox at work here. In fields like software development, a person can not become productive (and therefore valuable to an employer) without on the job experience. And so there is a skill level at which people can contribute nothing, but can not advance to the next skill level without doing the job for real, which they will almost certainly screw up, costing the employer money.

    Given that such a skill level exists, this is a "tragedy of the commons" scenario. It is advantageous for employers a

  • Just what we needed, more regulations making it harder to prove oneself and gain work experience. Minimum wage laws shut young people out of jobs that could lead to the top with no cost other than hard work (leading us to rely on colleges to do all of our training at great cost). Ever hear of those guys who worked thier way up from being a dishwasher to president of a company? Those days are gone, thanks to minimum wage laws, and now you can't even become an unpaid intern to get a foot in the door, and e

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