Are Unpaid Internships Legal?

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

There is no illegality in offering an intern an opportunity to study how an organisation functions etc as part of his curriculum and the interns are not expected to be paid any stipend also. but if you are giving training to a person in a particular department with a view to absorbing him as an employee, then the situation is different. He will become a trainee and a trainee is one who undergoes training in a particular work in which he is likely to be absorbed provided he proves that he is competent to do that work. At the same time, an intern is not doing any training but is conducting an organisational study for his skill development or for a value addition to whatever has been gained through theoretical or class room studies. Therefore, if he is groomed to be absorbed in a permanent post, she should be paid stipend which will have all the attributes of 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 internship except the one called Apprentice Act, 1961, meant for technical apprentice training in designated trades. Apprentice Act, though designed for parting training to technical persons like those under gone ITI, has widened its scope and now apprentices are engaged in service sector also. 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 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 please note that you won't be able to attract the talent. You will end up getting in-confident or mediocre candidates.

Let me quote what Mr Toyoda of Toyota Motor Corporation use to say. He use to say "great mean can only build great cars". But then great men you won't get 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-liberalisation era or a couple of years after the onset of the liberalisation process but obviously not after two decades.

Whether to save a few thousand Rupees and stave off talent or take a little 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 as to 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 he has stated the position. Hence, I will raise a few questions before giving a weblink about the law in 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: give an opportunity for the student to study the organisation and it's practices or help the student to see how theory learnt in the college applies in practice or is it to assess the student for an offer of a job? 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 internship 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 USA has written a good article on "Are unpaid internships Illegal?" at Are Unpaid Internships Illegal? | One Day, One Internship

It lists 6 criteria that should 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 <link updated to site home>
Both found at Google

Have a nice day.

Simhan
A retired academic in the UK

Dear Mr. Pradeep,
Senior members has 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 RIGHT TIME AND IN THE RIGHT WAY" because an INTERN is a FRESH MIND FUELED WITH CREATIVITY/TALENT/NEW IDEAS and lot more.
C) INTERN has no idea "HOW ORGANISATION FUNCTIONS" but i would appreciate if you can guide him in RIGHT DIRECTION rather associating him NEGATIVE PEOPLE, that can spoil his career.
D) My sincere and humble request ...kindly avoid, MISUSE OF FRESH TALENTED MINDS or availing their services FOR FREE OF COST because everyone has got their own EXPECTATIONS
There is nothing as such LEGAL or ILLEGAL.
With profound regards