Those in the private sector may well be, but the rules are complicated
By T.W.
AN INTERNSHIP has become the first rung on the ladder to many white-collar careers. Banks and accountancy firms now hire more than half of their recruits through their internship programmes; careers in politics, medicine, the media and many other fields nearly always begin with an internship. Two-thirds of American students have at least one internship under their belt before they leave college. But they are often badly compensated: nearly half the internships in America are completely unpaid. How do unpaid internships exist in countries that have minimum-wage laws?
Internships do not have special legal status: an employer cannot dodge the minimum wage simply by classifying a temporary worker as an intern. But there are some exceptions. Most countries with minimum-wage laws have carve-outs for public bodies. (That is why Barack Obama can employ hundreds of unpaid White House interns, even as he tweets about the need to raise the minimum wage.) Similarly, non-profit organisations usually get a free pass: charities are allowed to hire volunteers, which is how they classify their unpaid interns.
Where it gets interesting is in the private sector. In America, the Supreme Court ruled in 1947 that the Portland Terminal Company, a railway firm, was justified in not paying its trainee brakemen during a seven-day course that they were obliged to take before beginning their paid employment. The trainees were “work[ing] for their own advantage”, the Court ruled. More recently, the Department of Labour has come up with six conditions that firms must meet when offering unpaid internships. The trickiest, from the company’s point of view, are those that state that the internship must be “similar to training which would be given in an educational environment”; that the intern must not displace ordinary employees; and that the firm must not benefit from the work the intern carries out.
By these criteria, most unpaid internships in the private sector in America look decidedly iffy. It is a similar story in other countries. British interns at profit-making firms must be paid the minimum wage unless the internship makes up part of their degree course or they are doing short-term “shadowing”, or observing. (An annual scheme at The Economist's London offices pays £6,000, or $9,650, for three months.) Italy and Spain have recently introduced special minimum wages for apprentices. Firms that fail to pay are in growing danger of being taken to court. Last year Fox Searchlight, a film distributor, lost a case against two former unpaid interns who had worked on the film “Black Swan”. A string of companies in the media and fashion industries, from NBC to Donna Karan, have had to settle similar cases. The tide may be turning against unpaid internships. Except, that is, when it comes to the politicians who set the minimum wage: they are under no obligation to pay it.
