Unpaid internships may be illegal

The ability of students to find internships may soon become a tougher proposition.

That's if the federal government follows through on recent pledges to crackdown on the use of unpaid interns by companies.

Currently, the Fair Labor Standards Act of 1938 enumerates six standards for which a position can be unpaid. They include stipulations that on-job training is similar to what would be received in an academic setting; that training is for the benefit of the trainees and the employer derives no immediate advantage; that interns don't displace paid employees; and that all parties understand that the intern isn't entitled to compensation during or a job offer at the conclusion of training.

In spite of the longevity of this piece of legislation, many employers continue to fail to provide compensation for interns who are routinely asked to perform above and beyond the legal limits of their position.

The problem has been exacerbated in the current economic downturn, with interns providing companies with an easy way to reduce operating expenses without sacrificing productivity.

Several states, including Oregon, California, and New York, have begun to investigate and fine companies in violation of the law, and the head of the Empire State's initiative, M. Patricia Smith, is bringing that reformist spirit to Washington, D.C., as the top law enforcement official in the U.S. Department of Labor.

This crackdown could have a drastic impact on students here at St. Joe's, who depend on the experience gained at internships during their time as undergrads, albeit paid or not, to aid them in their postgraduate job search. But that influence could vary significantly across the realm of available jobs.

"I think most non-profits would then not be able to take on interns, and that would be a significant loss of opportunities both for students and for those agencies that benefit from having interns," said Matthew Brink, director of the Career Development and Learning. "It's just so hard to say. My hunch would be that if it's burdensome unduly so that employers would probably just eliminate their volunteer internship experiences."

According to Brink, the split of paid and unpaid internships posted through the Career Development Center (CDC) is generally 60-40, but the recent recession has skewed those numbers toward the unpaid side. This tends to be a common phenomenon when there are fluctuations in the economy.

The charitable nature in which the government portrays employers who dole out internships may be one of the biggest stumbling blocks, as most companies won't undertake the trouble of starting an internship program if they derive no benefit from it.

"My sense is that employers do not do this offering of internships out of an altruistic good will, it is more for the sake of benefitting from the work that they do, projects they work on, contributions they make as interns as well as the possibility of brining them on as a full-time employee," Brink said.

Even if the pay-off isn't immediate, employers can benefit from reduced recruitment costs by already having a ready-made pool of applicants in their interns, creating one of many gray areas in the legislation.

"It's advantageous for employers to bring in interns on a regular basis, evaluate them, and choose from that group the most talented or best fit interns for full-time positions and then offer them full-time employment," Brink said.

The issue is not only found in compensation, but also the benefit of the experience gained by students. Internship providers that take advantage of interns by utilizing them for tasks other than what they were originally hired for can also make them a target of the government's more watchful eye.

The CDC at Saint Joseph's University is the first line of defense against this type of abuse. They have an extensive screening process for first-time posters of jobs on their site, and are constantly evaluating the viability of companies to continue listing on their site while addressing any complaints by students.

All companies that post on the St. Joe's Web site must be in compliance with the human resources laws of Pennsylvania. But those laws draw the cut-off for many requirements at companies with at least 50 employees, so for many non-profits and other small companies, Brink says the university extends a "good will" that the laws will be adhered.

If complaints do arise, the CDC encourages students to resolve them through the structures in place at the company or organization. In extreme cases, the company may be prevented from posting future job openings at St. Joe's, though Brink says that has only occurred "four or five times" in the five years he's worked here.

The solution to the issue may lie in providing class credit for an increasing number of internships. The connection to a university's curriculum can help ensure the student's duties adhere more closely to what they are studying and the student can receive some compensation that does not come at the direct expense of the employer.

One system already in place at the university that does this is the Accounting Internship program, though all of the internships available through this program are also paid. Students must meet minimum academic requirements to be considered and those that qualify are paired with firms the university has long-standing relationships with, including Price Waterhouse Cooper and KPMG. Students receive credit and payment, generally between $22 and $24 per hour for the three months they work, and many leave their temporary position with offers for full-time positions after graduation.

The program, which has been in existence for the last decade, also requires students to maintain a journal of activities to keep employers accountable. The accounting department's situation is somewhat unique in what type and size of companies they use, but the basics of the program are something that may be emulated elsewhere.