Unpaid Internships Are Possible, If You Jump Through All the Hoops

I had an interesting conversation with a fellow named Matthew Zinman. Matt is an entrepreneurial sort who has started a number of businesses around INTERNSHIPS.  He is passionate about the value of internships to companies and to the intern. Having  worked at a company where we used interns I also know the value of the work experience in enhancing a students education. However, based upon a ruling by the U.S. Department of Labor last spring having an intern, especially one that you were not paying, became problematic. I even told people that unpaid internships were a violation of the FLSA. But it turns out, according to Matt Zinman that I was wrong. He made me aware of a compliance advisory he wrote that lays out exactly how you can have an unpaid intern. These steps, taken from the USDOL Fact Sheet #71 are:

  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.

Matt is not a big fan of the way the USDOL is handling internships, as you can see in his responses to questions on his compliance sheet. But he is committed to helping companies navigate the six steps listed above in order to make the internship a mutually valuable experience to both the company and the student. To that end he has set up Z University at InternshipSuccess.com to help guide companies through the process of using unpaid interns. You have to do this correctly, because if you don’t you violate the FLSA and will be liable for back pay, taxes and penalties.
When I was running the company internship program we avoided issues by making the interns paid positions. You can avoid alot of issues that way. But given the economy today that may be more difficult for some companies, particularly small companies. So some expert guidance on how to avoid the landmines is good to have. So if you use interns I would suggest you check out Matt’s Z University.
Just to be clear, I am not being paid for an endorsement. I am just pointing out something that I think will be of value to you that use interns or are considering using interns, especially unpaid interns. I am all about making sure it is a quality experience for everyone involved. Young adults getting ready to graduate need a very good dose of workplace reality before they graduate and the internship provides that dose.
By the way, Matt has also created an organizational called the Business for the Ethical Treatment of Interns and he has some very creative and short videos to make his point. For a chuckle check out his Star Trek video or the take off on 24, called 25.

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