Although there may be a few situations where an unpaid intern is legal, in most cases in a for-profit company, it’s not. In order to qualify as an unpaid internship, the U.S. Department of Labor provides six criteria that must be met. However, to put it simple, for an unpaid intern to be legal, no work can be performed by the intern that is of any benefit at all to the company. That is, the intern cannot deliver mail, sort files, input data into computers, file papers, organize a person’s calendar, conduct market research, write reports, or any other job that assists the employer in any way in running their business. An example of a legal unpaid intern is where the job is part of a formal school program and the intern is strictly shadowing one of the company’s employees.
Although many companies have relied upon unpaid interns as a way to minimize costs and provide opportunities to eager workers who are willing to work for free, such an approach can create expensive back tax liabilities. As with misclassification of an employee as an independent contractor, employers with misclassified unpaid interns face potential liability for unpaid wages and violations relating to failure to pay minimum wage, which could be significant for a full-time intern. In addition to the wages due to unpaid interns, the employer could face potential liability for overtime and missed meal or rest periods depending on the state you’re operating in.