Are Unpaid Internships Legal?

Hello everyone,

As the subject line reads, I am curious to know if it is legal to offer someone an internship without pay. Basically, we are planning to offer someone an internship for 3 months without pay and then after the probation period, offer them a full-time job, pending satisfactory performance. Please advise.

Thanks!
Pradeep

There is no illegality in offering an intern an opportunity to study how an organization functions, etc., as part of his curriculum. The interns are not expected to be paid any stipend. However, if you are providing training to a person in a particular department with the intention of hiring them as an employee, then the situation is different. They will become a trainee, and a trainee is someone who undergoes training in a specific role with the potential to be absorbed, provided they demonstrate competency in that role.

On the other hand, an intern is not undergoing training but is conducting an organizational study for skill development or to add value to their theoretical or classroom studies. Therefore, if they are being prepared to be absorbed into a permanent position, they should be paid a stipend that encompasses all the attributes of a salary.

Regards,
Madhu.T.K

Thank you, Madhu.

My question was if there was a specific law regarding this. More than the ethical part, for our case, legality is more important.

Pradeep

There is no law governing internships except the one called the Apprentice Act, 1961, meant for technical apprentice training in designated trades. The Apprentice Act, though designed for imparting training to technical persons like those who have completed ITI, has widened its scope, and now apprentices are engaged in the service sector as well. However, post-graduate interns for a short period of two months will not come under its purview.

Regards,
Madhu.T.K

Dear Pradeep,

My reply is neither from an ethical nor from a legal point of view. However, I would like to cover situations in the job market.

Today it is no longer an employers' market but is the job-seekers' market. They have a wide choice to choose. Amidst this choice, if you offer them an internship without payment, it goes on to show that this is your cost-saving measure. However, at the same time, please note that you won't be able to attract the talent. You will end up getting unconfident or mediocre candidates.

Let me quote what Mr. Toyoda of Toyota Motor Corporation used to say. He used to say "great men can only build great cars." But then great men you won't get for free too. You get them at a premium!

Today employers are chasing talented candidates. Though I am not from the IT industry, I am its watcher, and let me tell you that the IT industry grew very fast because they attracted talent. Average IQ level employees obviously reflect in the balance sheet of the company.

This kind of proposition was perfectly suitable in a pre-liberalization era or a couple of years after the onset of the liberalization process but obviously not after two decades.

Whether to save a few thousand Rupees and stave off talent or take a little more liberal view, pay as per the market standards, and attract better talent - the choice is yours.

Thanks,

Dinesh Divekar
+91-9900155394

Dear dstang,

Either from your query or from your profile, it is not clear where you are based. Hence, it is difficult to say what the law of the land is. However, Madhu is an expert in law and has stated the position. Therefore, I will raise a few questions before providing a weblink about the law in the USA that can be used as a guide only.

Where are you based, and how large is the firm?

What is the objective of the internship: to give an opportunity for the student to study the organization and its practices, or to help the student see how theory learned in college applies in practice, or is it to assess the student for a job offer? For example, as a student at IISc, Bangalore, we had to undergo industrial training every summer. We were only expected to observe and not contribute. Most students undergoing a sandwich course get paid internships in their 3rd year of a 4-year course, and they are expected to actively contribute.

Dinesh Divekar has given you a sound reason why one should pay for interns: to attract better quality students. Willy Franzen in the USA has written a good article on "Are unpaid internships Illegal?" at [Are Unpaid Internships Illegal? | One Day, One Internship](http://www.onedayoneinternship.com/blog/are-unpaid-internships-illegal/).

It lists six criteria that should be met if an intern is not going to be paid. I suggest that you kindly read and see if it is of any help.

Also, please see [Buena Vista University - Paid vs. Unpaid](http://bvu.edu) (link updated to site home). Both found at [Google](http://www.google.co.uk/#sclient=psy&hl=en&source=hp&q=internship+paid+ver sus+unpaid+legal+issues&aq=f&aqi=&aql=&oq=&pbx=1&f p=d56a1d449790013d).

Have a nice day.

Simhan A retired academic in the UK

Dear Mr. Pradeep,

Senior members have posted their best suggestions.

A) In short and sweet, I would suggest you to "EXPLORE HIDDEN TALENT" by way of POSITIVE MOTIVATION.

B) "DO THE RIGHT THING IN THE RIGHT TIME AND IN THE RIGHT WAY" because an INTERN is a FRESH MIND FUELED WITH CREATIVITY/TALENT/NEW IDEAS and a lot more.

C) An INTERN has no idea "HOW AN ORGANIZATION FUNCTIONS" but I would appreciate if you can guide them in THE RIGHT DIRECTION rather than associating them with NEGATIVE PEOPLE, which can spoil their career.

D) My sincere and humble request... kindly avoid THE MISUSE OF FRESH TALENTED MINDS or availing their services FOR FREE because everyone has their own EXPECTATIONS.

There is nothing as such LEGAL or ILLEGAL.

With profound regards