Unpaid interns?

Last updated on: July 15, 2013 at 10:06 pm by Jane the Actuary

Unpaid interns? 2013-07-15T22:06:00-06:00 Jane the Actuary

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The (Chicago) Tribune featured another article on lawsuits by unpaid interns, which I’d link to here, but I read the Trib in paper form, and much of the online version is behind a paywall (good for them — I hated paying for content they were otherwise giving away). But nonetheless, for those who say that unpaid internships are a matter of free choice:

I own a business selling widgets — well, artisanal widgets, on etsy.com; I want to hire my unemployed neighbor, but I can’t afford to pay the minimum wage. I suggest to her that I pay $5 an hour, and she agrees, because she hasn’t been able to find work elsewhere and besides, I manufacture my widgets in my basement, so she’d save on commuting costs.

Now revenues are growing and I put out the word that I’m looking to hire a second employee. Two more neighbors come by and tell me they’re interested. (Times are really hard.) I figure, if a $5 an hour employee is good, a $4 an hour employee would be even better, so I lay it all out and ask each of them, how low a wage would you accept to get the job over your competitor, and neighbor #3 willingly undercuts neighbor #2. I’ve now got my $4 an hour employee.

I’m starting to get nervous now, though — revenues are growing. What if one of my employees complains? I get my lawyer involved, and have him draw up a contract, stating that I’m providing an internship in making artisanal widgets with a stipend of $160 per week. I then put the word out that I need an intern to design a marketing plan; heck, this time I don’t even bother with a salary, but I just reassure the student that her summer’s efforts will result in a great portfolio for future employers and a fantastic resume once Artisanal Widgets, LLC takes off.

Now I’m doing pretty well for myself, so I decide to treat myself, and I hire a housekeeper (paid in cash), a nanny (paid in cash), and a lawn-mowing serivce (paid in cash) — all of whom give me great deals because they don’t have to report the income or pay self-employment taxes.

When did I cross the line?

From the moment I wrote that first $200/week paycheck? — and not because I did anything against my employee’s will — she agreed to it — but because we as a country have agreed that the greater good is served by requiring a minimum wage, regardless of whether any given worker is willing to work for less.

If so, then why is it OK to pay interns nothing at all?

There simply is no credible case for unpaid internships without also arguing for abandoning the minimum wage (except for nonprofits and government agencies where volunteer work is appropriate), but there are middle-ground solutions. For a typical case where the intern does a mix of low-level gofer/office work and job shadowing, an employer could differentiate between “learning” time (e.g., shadowing) as unpaid and “gopher” time as paid so that the internship is a combination of part-time job and additional learning time. For a case where an intern produces a body of work (e.g., articles for a publication, video pieces in the entertainment industry, a marketing campaign, etc.), the employer could pay on a freelance basis. For a case where the staff at the employer spend a significant amount of time providing the intern with training, either one-on-one or in a classroom setting with a group, track and take credit for it in the manner of a “course fee” to be netted out of the paycheck for the “grunt work” portion of the workday.

There are answers out there, and there are no excuses for failing to follow the law!

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