Internships provide valuable experience for students and young professionals seeking a profound understanding of an industry or occupation. They serve two purposes: helping students determine possible career options and teaching skills required for success.

Colleges and universities often require students to complete internships as part of their degree programs, which definitely benefits students in the long run. Employers are more likely to hire a candidate with a 3.2 GPA and relevant professional experience than a candidate who offers nothing other than a perfect GPA. You may find that a number of employers don’t care about GPAs as long as you have the degree.

Many students seek internships simply to gain professional experience, not expecting compensation from an employer. However, some employers take advantage of interns and exploit them for free labor. While paid internships are more desirable than unpaid ones, they are more competitive. So, before taking on an unpaid internship, it is important for you to understand your rights so that you are not taking advantage of.

Unpaid interns in the nonprofit world

Nonprofit employers, according to the Fair Labor Standards Act (FLSA), must treat unpaid interns as volunteers who are donating their time to fulfill “public service, religious or humanitarian objectives.” The volunteer cannot be involved in any commercial activities, such as working in a gift shop, or else an employment relationship exists and the intern is entitled to compensation as outlined by the FLSA. States may define volunteerism somewhat differently than the U.S. Department of Labor define, so these laws are worth exploring a bit more.

A test for for-profit employers

“Volunteers” are not legal for for-profit private sector employers. In order for a for-profit private sector employer to have unpaid interns that are exempt from FLSA, they must meet all of the following six criteria:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of these criteria are not met, an employment relationship exists and the intern must be paid at least minimum wage—plus overtime for work hours exceeding 40 in a week.

Internships are intended to be educational. The Department of Labor says that they should teach skills useful in “multiple employment settings.” If the work is unpaid, the intern cannot be involved in the business’ operations or perform duties from which the employer receives direct benefit. Unpaid interns cannot ever be used as substitutes for an employer hiring actual employees.

Rather than have the close supervision an employee would receive, unpaid interns are expected to observe, shadow and receive first-hand training. If the intern falls under the close supervision an employee would receive, an employment relationship exists and the employer may have to pay up.

Lastly, the internship cannot be used as a trial period for determining if an employer will hire the intern after the internship.

In recent years, there has been a surge of former interns suing companies for unpaid and underpaid work. In 2014, Condé Nast settled a $5.8 million class-action lawsuit covering nearly 7,500 interns, and subsequently terminated their internship program. Hollywood studios have also been brought into court, with most now agreeing to pay interns.

Unpaid internships are acceptable if they adhere to state and Department of Labor laws. Before starting your internship, be sure to have everything in writing, including your duties and the employer’s expectations. Also, you should have in writing definitive start and end dates, which can help you avoid being taken advantage of.