Labor Pains


Thinking about starting an internship program? Be careful. Navigating unpaid internships can be tricky.

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Thinking about starting an internship program? Be careful. Navigating unpaid internships can be tricky.

Everyone is talking about the workforce shortage in manufacturing, but Climax Portable Machining & Welding Systems is doing something about it. Since 2008 the Newberg-based company has cycled 118 interns through its ranks. During their eight-to 12-week time at Climax. these young people, ages 17 and older, learn a wide variety of skills. How wide? “Our interns work in engineering, HR, marketing … basically everywhere in the company,” says Joni George, chief culture officer and vice president of human resources. 

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Get Legal

Certain interns and trainees are not considered employees. Often the arrangement is one in which a student intern earns high school or college credit in exchange or participating in a training program conducted by the employer. For details, visit 
“Meghan, take a picture of yourself looking like an unpaid intern and get it back to us by 4 o’clock.” 

And that’s just for starters. Climax interns also take life-skills classes to learn about personal finance management, résumé writing — even first aid and how to buy a car. They must also complete a community service project and hone their public speaking/presentation skills, and they receive an explicit explanation of what “Casual Friday” means.  

“Our program connects the dots between school and work, which is what business is looking for,” says George.

Climax’s program has proven successful for both the company and the interns who are hired as temporary employees and paid minimum wage. But why jump through costly HR hoops for an internship program? “Our internships are paid, so we eliminate the risk of violating any employment laws,” George responds. 

Turns out the agreement works better for the intern as well. The National Association of Colleges and Employers found that 63% of paid interns received at least one job offer while only 37% of unpaid interns did — almost the same number as students who had no internship at all. It seems that paid internships work better for both the business and the interns.

Still, unpaid internships are common. Anywhere between 500,000 and 1 million people intern for free each year, according to ProPublica, the nonprofit investigative-journalist newsroom, a number that has more than doubled over the past 20 years.  

Companies that offer unpaid internships must take care that the interns remain interns and don’t morph into unpaid employees, which could open up legal ramifications. “There is a six-part test to see if you have an employee or an unpaid intern,” reports Paul Ostroff, an attorney with Lane Powell PC, referring to U.S. Department of Labor guidelines. “We recommend that our clients have a written internship agreement with every individual who qualifies as an intern.” 

Even with the guidelines, there have been a few cases, both around the country and in Oregon, where unpaid interns successfully sued for compensation. Fox Searchlight Pictures was penalized for not paying two New York-based production interns for their work on the movie “Black Swan.” In 2010 Grape Solar in Eugene agreed to pay two interns over $3,400 in back wages and expenses.

Other employment laws apply as well. As of 2013, Oregon, along with a handful of other states, offers unpaid interns protection under the same employment discrimination rules as paid employees. This law grants unpaid interns legal recourse for workplace violations including sexual harassment, unlawful discrimination and retaliation for whistleblowing. 

Of course, the easy way to cut through the legal complexities is to actually pay the interns for their work, like Climax does. The opportunities plus the compensation make the program very popular. “We usually have over 100 applications for 20 openings,” says George.

Portland General Electric, an investor-owned utility, also boasts a robust paid- internship program. Sandra Elverud has interned as an analyst at PGE since graduating from Portland State University in June with a B.S. in economics. While she can’t give specifics, Elverud reports that she makes “a living wage” working a 40-hour week as an intern. The single mother took full advantage of the networking opportunities that her internship allowed and hopes to be hired on when it ends. “It’s not a given,” she says. 

Elverud says entry-level positions in her field require more experience under your belt. This means that while internships are not mandatory, they are “certainly helpful.” But considering the sticky ball of legal wax they open, are internships worth it for employers? Especially after a close reading of intern criteria No. 4: Unpaid interns may, on occasion, actually impede operations.

“From a management perspective, the key reason to have interns is to provide greater visibility in recruiting candidates,” says Ostroff. “It expands the company’s name.” For Climax, and others in light manufacturing, it’s a way to home-grow the next crop of employees. 

“Many of today’s students don’t understand manufacturing,” says George. “They think, ‘Why would I want a dead-end, dirty, boring job?’ This is a way to show them manufacturing offers living-wage jobs, high technology and a good future.”

So if your company is ready for the pitter-patter of little intern feet, go ahead. Make the jump. But pay them. With its surrounding controversy and legal tumult, the unpaid internship may be more trouble than it’s worth. The paid internship, however, looks like a win-win.