Are Unpaid Interns Being Exploited?

Are unpaid internships going to become a thing of the past?  If the U.S. Department of Labor has its way, then that may be the case.

The Department of Labor recently filed a brief in support of a lawsuit by eight former interns who are claiming they are owed back wages, even though they signed on as unpaid interns when hired.

There are some bizarre rules when it comes to hiring unpaid interns.  While there is a six-part test available for the Labor Department to determine if a business can legally have unpaid internships, the courts more typically consider whether the company or the unpaid intern derives the greatest benefit.

In other words, it is all very subjective and a company really has no way of knowing whether they will win or lose in court if a lawsuit is filed against it.

In its brief, the Labor Department is saying that free labor is “both tempting and available” due to the weak economy.  But perhaps it is the unpaid interns seeking out such an arrangement in order to gain experience in order to later get a job.  Sometimes internships can lead to a job with the company providing the internship if management is happy with the work being done.

While the plaintiffs in the case are claiming they were made to work full-time while not being paid, we must be careful with the language being used.  Nobody was forced to do anything.  If the interns were not happy with the arrangement and did not like the working conditions, they were free to leave at any time.

When a company hires an intern to do work, with or without pay, it is an agreement being made between consenting parties.  Both parties deem themselves better off.  The company gets cheap labor, many times free, along with the potential of finding a good future employee.  The intern gets experience, along with a trial run at the type of work being done.  Some interns may decide whether or not that type of job is right for them.  In addition, the intern has the potential of being hired on for a full-time paid position by the employer.

In our world of high unemployment today (mostly caused by government), more people are likely seeking internships, even if unpaid, in order to find work, either through more experience or through the employer providing the internship.  If someone doesn’t have enough money to put food on the table, they probably aren’t going to accept an unpaid position as their primary employment.  Unpaid internships are sought by rational people who can look beyond today for a better tomorrow.

The Minimum Wage

I find it ironic that there are minimum wage laws, yet there also exists unpaid internships.  I have pointed out this inconsistency before.

You can hire an intern and pay that person nothing, yet it would be illegal for you to pay that same person doing that same job five dollars per hour.  This is our system of government.

So in the Labor Department’s attempt to crack down on unpaid internships, I suppose it is being more consistent.  We all know that the Labor Department would not start advocating a repeal of minimum wage laws, so cracking down on unpaid internships is the only way to gain some consistency.

Of course, as long as there are minimum wage laws, I would prefer the inconsistency of having unpaid internships, because at least it gives something of an opportunity for those seeking skills and experience in the workplace.

If the Department of Labor continues to pursue going after companies with unpaid internships, and if the courts start siding with the interns seeking back pay, then I fear what the consequences will be.

Just like most government laws and programs, the results will hurt the innocent who are honest and hardworking.  It will end up producing the opposite results of the stated intentions.  Just as minimum wage laws end up hurting unskilled workers the most, the disappearance of unpaid internships would hurt young people seeking experience the most.  These are the people struggling to find full-time employment because they don’t have the experience that many employers are looking for.

In addition, hiring interns is a great way for companies to test potential employees.  Many companies don’t want to hire employees without knowing their work habits because it is difficult to fire someone due to fears of a lawsuit.  Some companies will hire contractors through a temp agency to test people.  In the case of young, unskilled workers, it may not be worth it to pay someone even the minimum wage, as their initial productivity will be very low.  Being able to hire unpaid interns really is a win-win situation in most cases.

This is another case of the government getting involved where it shouldn’t.  It is interfering with voluntary agreements that will only result in more unemployment and more frustration for those seeking experience.

If someone doesn’t like the fact that an internship is unpaid, then nobody is forcing them to take it.