Small Business Finance News

Small Businesses Increasingly Turning To Unpaid Internships

Written by Jenna Weiner
Published: 6/29/2010

Small businesses are increasingly tapping into the power of unpaid interns although regulations regarding unpaid internships make some business owners wary of the practice.

Many companies bring on unpaid interns over the summer to give college students real-world experience, and an increasing number of small businesses are now following the trend, according to the Los Angeles Times.

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As the Times reports, a survey last month by said that 68 percent of workers in college career centers have seen an increase in unpaid internships this year compared with last year, while just 30 percent had seen a jump in paid internship positions.

Officials say that many small business owners have been hesitant to take on interns because they are unsure about the Department of Labor's regulations governing the practice. Officials told the paper that prosecutors are stepping up enforcement of those rules - bad news for small business owners who have abused the system.

"We are well aware that there are a lot of abuses of internship programs where it's not really being done to provide a skill or benefit to the intern, but is basically being done for cheap or free labor," David Balter, acting chief counsel at California's Division of Labor Standards Enforcement, told the paper.

The DOL regulations surrounding unpaid internships say that an internship program cannot be used to replace regular employees, should be set up to benefit the intern - and not the employer - and must entail close supervision and training. Both parties must also agree that the position involves no pay and does not guarantee a job following the internship.

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