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Why Big Companies Don't Hire Unpaid Interns

According to a business story that ran in the New York Times over the Thanksgiving weekend, businesses across America are indeed hiring, if you are willing to work for free.

As the article notes, unpaid/low-paid internships are not just for college kids anymore. Unemployed professionals with families in their 30s and 40s are settling for internships now as they try to transition into other industries. The article presents the internship craze as a win-win for both the interns and the businesses that get "a brilliant, recession-proof way to double [their] work force," as one marketing executive who uses interns puts it.

A cottage industry of placement firms have even popped up which you can pay to help you find unpaid work. One of those placement firms claims that internships are more common at smaller firms and nonprofits than at larger, public companies.

There's actually a reason, which the article fails to mention, why unpaid internships are unavailable at public companies. Most unpaid internships are technically illegal.

For the student/trainee/intern/apprentice to not be classified as an employee, all of the following criteria must be met, according to the federal Fair Labor Standards Act:

  1. The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
  2. The training is for the benefit of the trainees or students;
  3. The trainees or students do not displace regular employees, but work under close supervision;
  4. The employer that provides the training receives no immediate advantage from the activities of the trainees or students and, on occasion, his operations may even be impeded;
  5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and
  6. The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.
Anyone who does any regular work that benefits a business, even if it's just stuffing envelopes or going on coffee runs, is an employee who must be paid at least minimum wage. Boutique firms and nonprofits get away with unpaid internships because the interns are looking to pad their resumes and labor lawyers have little to gain by going after tiny firms that break the law.

Big companies, on the other hand, have to be more careful about following labor laws to the letter since they have more to lose. Plus, larger companies often have the resources to actually pay their interns a reasonable wage and train tomorrow's talent with the intention of someday hiring the best. That's a true win-win.

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