The Unpaid Internship – Economic Discrimination

I feel a bit better after ranting in yesterday’s post, but I feel the topic of the unpaid internship needs its own special post.

Whilst talking to my girlfriend, she blurted out, “Why don’t interns get paid minimum wage?”

Now, this is a fair question, and after doing a bit of research. A great post over at ‘One Day, One Internship’ outlines some of the legal issues regarding interns. Here are some highlights:

First: “…The U.S. Department of Labor’s Wage and Hour Division created a test to determine whether a “trainee” or intern is considered an “employee” based on a 1947 Supreme Court decision that evaluated whether “prospective train yard brakemen were ‘employees’ within the meaning of the Fair Labor Standards Act.” The test requires that all 6 of the following statements are true about the intern’s time with the company.

1. If the training, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in a vocational school;

2. If the training is for the benefit of the trainee;

3. If the trainees do not displace regular employees, but work under close observation;

4. If the employer that provides the training derives no immediate advantage from the activities of the trainees and, on occasion, the employer’s operations are actually impeded;

5. If the trainees are not necessarily entitled to employment at the completion of the training period;

6. If the employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.” (source: http://www.onedayoneinternship.com/blog/are-unpaid-internships-illegal/)”

Second: “The Fair Labor Standards Handbook for States, Local Governments and Schools, does, however, go into great detail about when a student intern is not considered an “employee.”

As a rule, the Department of Labor will not consider students to be employees when they are involved in education or training programs that are “designed to provide students with professional experience in the furtherance of their education and training and are academically oriented for their benefit” (Wage and Hour Opinion Letter, Jan. 28, 1988).

Furthermore,

In a May 10, 1983, opinion letter, the Department of Labor determined that where students would receive college credits for performing an “internship… which involves the students in real-life situations and provides the students with educational experiences unobtainable in a classroom setting,” the interns would not be considered employees.” (source: : http://www.onedayoneinternship.com/blog/are-unpaid-internships-illegal/)”

Another law blog goes on to contradict this last statement and says all unpaid internships to students receiving credit are illegal. Sounds like the unpaid internship is as murky as a public toilet.  Basically, if your internship does not meet all of the criteria above it is considered illegal under the Fair Labor Standards Act. Even if it is fairly confusing.

Personally, I know of many interns that have violated this act and feel that it is pretty commonplace. Company’s advertise these positions to new workers in exchange for experience.  Instead, interns are forced to fill in most of the busy work that employees would rather not do.

There are many problems with this system including economic discrimination to people who can’t afford to take a year off and work for free to make the right connections and gain experience. There is lax enforcement of these standards and it is creating an environment where employers abuse insecure young labor to work for free. Unfortunately, I don’t see this changing anytime soon and only getting worse in the recession as companies try to save money, jobs are harder to come by, and insecurities are on the rise. It’s high time the Labor Department took a closer look at this issue.

Financial resources for students and recent college grads

After a lot of random searching and reading. I’ve come across a few good resources that I hope everyone can get some use out of.

1. Mint.com – A great resource for anyone and a hell of a lot cheaper than Quicken. This site can manage your spending and set a good budget. Also, it has a pretty good blog about investments and what not.
2. Google Finance and Yahoo Finance – Great for checking up with news and quotes.
3. Stockpickr – A comprehensive look at stocks
4. I will teach you to be rich – A good blog filled with shameless plugs. Has some great advice.
5. Get Rich Slowly – Again another good blog
6. 7 Investments from CNN finance
7. Young Money – A blog focused toward younger investors