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- Over 40% of interns are unpaid in the US, according to the 2021 Internship & Co-op Survey Report.
- Insider reviewed jobs posted on recruiting app Handshake, and found 523 unpaid internships.
- Courts use a “primary beneficiary test” to determine if interns must be paid. Here’s what it means.
- See more stories on Insider’s business page.
Unpaid internships are not only legal in the US – they’re shockingly common.
More than 40% of interns said they were unpaid in this year’s Internship & Co-op Survey Report conducted by the National Association of Colleges and Employers.
Most public sector internships in Congress, the US Department of State, and the United Nations have been unpaid for years, which led to intense pushback in 2018. As a result, interns on Capitol Hill now earn a minimum of $1,800 a month.
Insider found over 500 unpaid internships currently listed on Handshake, a popular online recruiting tool for students and recent graduates. The unpaid positions include paralegals, accountants, IT technicians, financial analysts, writers, designers, and more.
A total of 34 unpaid internships listed on Handshake were posted by Digital Factory Inc., a mobile technology company based in Chicago.
“The CEO never pays anyone in the firm, this company is running by UNPAID interns who come and go fast,” one former intern wrote on the company’s Glassdoor page. “They expect you to work 8h a day as an intern, which includes attending meetings every day.”
Digital Factory did not respond to a request for comment.
On Tuesday, nearly 40 lawmakers called on the Department of Labor to track unpaid internships and help crack down on internship violations.
When are unpaid internships legal?
In spite of minimum wage laws, employers can get away with not paying interns due to what courts call the “primary beneficiary test.” Its purpose is to measure who benefits more from the internship – the employer or the intern.
If an intern is determined to be the “primary beneficiary” of the relationship, they might not legally qualify as “employees” under the Fair Labor Standards Act. As a result, minimum wage laws would not apply.
In recent years, the test has appeared in lawsuits between students and Fox Searchlight Pictures, the NCAA, Hearst Magazine, and multiple cosmetology, beauty, and massage schools.
The test measures seven specific factors. The first, “expectation of compensation,” easily favors the employer if the internship was advertised as unpaid, and the intern accepted the position with the knowledge that it would be unpaid.
The next four factors are slightly more complicated, focusing on if the internship provides educational training, if the intern receives class credit, and if the program “corresponds with the academic calendar” within a limited duration of time.
Factor six measures “the extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.”
Factor seven weighs the intern’s expectations of receiving a paid job at the end of the position.
“If analysis of these circumstances reveals that an intern or student is actually an employee, then he or she is entitled to both minimum wage and overtime pay under the FLSA,” the US Department of Labor website says.
“On the other hand, if the analysis confirms that the intern or student is not an employee, then he or she is not entitled to either minimum wage or overtime pay under the FLSA.”
Have you had an unpaid internship? Contact this reporter at htowey@insider.com
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