Unpaid Internships - DOL Guidelines for US Employers & F-1 Students

Published On
September 28, 2023
Read Time
6 Minutes

What Is Unpaid Internship?

The Internship is a major gateway to land in the job of your dreams and boost your skills and passion. ln this competition-driven world, having those extra points for enhancing your skill would bring you a step ahead from the rest. But what if you aren't getting paid for your internship? Yes, the unpaid internships are becoming more and more common in the present day.

Just as the name suggests, an unpaid internship is actually working for an organization without receiving pay in any form. Even with an increase in unpaid internships, some students and employers still have major concerns in opting for one.Their major concern includes: "Is it acceptable to engage in unpaid internships during the course of study?"

It is an absolute yes.

But there are certain requirements both employers and students has to verify before engaging in one.Here is an article which throws limelight on your concerns.

Unpaid internship: Who is it for?

A student graduating from US university can engage in any kind of employment (paid or unpaid), with proper work authorization. If the student is under lawful F-1 status, then he/she can apply for either CPT (Curricular Practical Training) or OPT (Optional Practical Training). Even if both of these vary in terms of time period and type of employment, they allow a student to engage in unpaid internships.

Though having a CPT /OPT is not mandatory for an unpaid internship, it is highly advisable. This will help in demonstrating that this employment is a part of the curriculum. Also if the employer is willing to shift the student to a paid employee in the future, he/she cannot do so without a proper work authorization for the student. To apply for a CPT, the student must have a job offer ready. Students can pursue work authorization (CPT) through the DSO (Designated School Official).

A student can engage either in a part-time or full-time internship upon the completion of first academic year. A student can work under CPT until the completion of their graduation. However, if a student works for 12 months or more under CPT, then he/she is no longer eligible for OPT.

The other work authorization available for F-1 students is: OPT. Unlike CPT, this allows students to engage in an unpaid internship during and after their course of study. But the total time allotted for completion of OPT is 12 months. The student has to file Form I-765 with the USCIS (U.S. Citizenship and Immigration Services) to get their work authorization.

Similar to CPT, a student is eligible for OPT only after the completion of first academic year. And the internship should correspond to the student's major area of study.

The Big Question is: Why are Students Opting for an Unpaid Internship?

One of the main reasons which is making students say "yes" to unpaid work is the huge competition they have to face in the search for a potential job offer. They believe that an intern in a well-known firm can have a better career, even if it is at the cost of zero income. While that cannot be the case with students who need financial aid. Students also believe that they can build a professional network, which helps them in getting full-time employment after the internship.

Are Employers Exploiting Unpaid Internships?

To an extent, Yes. Some employers think "Why should I hire an employee when an unpaid intern can do the work?". This makes the unpaid intern work as a full-time employee without any form of remuneration. Another argument raised by the students is: "Is the work relevant to my (student) major area of study?"

So, unpaid internships will always remain a debatable topic for the students and the employers.

How DOL (Department Of Labor) is Solving the Problem?

Even if some interns benefit from the unpaid internships, the other side of the argument always remains. What about the interns who are working for long hours? It leaves them no scope to earn for their basic needs. So, DOL has come up with 7 factors to determine if the unpaid intern is actually an employee.

Unpaid Internship Guidelines for Employers & Interns- DOL

According to the Fact Sheet #71

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern's formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern's academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship's duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern's work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Through this test, if any unpaid intern is qualified as an employee then he/she is eligible for the wages according to the FLSA requirements. However, the interns doesn't require minimum wages if he/she is not an employee. These guidelines will help employers in checking their compliance with the law, while students can ensure that employers are not exploiting them through unpaid internships.

Here are the Eligibility Criteria for an Unpaid Internship (CPT / OPT)

If an employer is selecting a student for an unpaid internship, they should make sure that the student meets all the eligibility criteria

What Documents Do an Unpaid Intern (CPT/OPT) Need?

Do an Unpaid Intern Requires Form I-9?

No, unpaid interns don't need to complete the Form I-9. Form I-9s are exclusively for those employees who work for remuneration. So, if an employer requests Form I-9 completion from an unpaid intern, the intern can simply say "no".

Hope the article helped you in understanding the guidelines of the unpaid internship. What do you think, will the DOL guidelines make the unpaid internship a stepping stone for student's career?

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