Today, the “Black Swan” case, which brought the issue of unpaid internships to the fore once again, is close to being settled. Yet, the debate about unpaid internships still rages on.

Whenever most of us talk about internships, we think in terms of pay and just compensation. We may also worry about the legal implications. If you’ve watched shows like “Adam Ruins Everything,” that may have reinforced negative opinions of all unpaid internships.

What Do Businesses Worry About?

Businesses grapple with this topic every day. And compliance with the Fair Labor Standards Act is the greatest worry.

Now, although our CEO and founder, Super Julie Braun (SJ), contends that the FLSA needs to be revised, it does allow for unpaid internships. However, regardless of a business owner’s ability to pay interns, not all businesses can fully comply with the FLSA. In particular, Rule #4 is the hardest. As SJ says, “Nobody can do it; not the U.S government, any nonprofit organization and certainly not any for-profit business.”

That is certainly true. The FLSA criteria always exempted government entities for this reason. Colleges and universities had some leeway, too. However, they also struggle with the criteria or clearly ignore it.

What Do Interns Worry About?

Every intern wonders: Should I take on an internship? And [how] will I advance in my career if I do?

Over the years, studies have suggested that paid interns have better prospects.

For starters, students who had paid internships were more likely to get work upon graduation, according to a 2013 National Association of Colleges and Employers study. About 63% of the students with paid internships received job offers. Only 37% of students with unpaid internships got hired. And only 35% of students with no internships received job offers.

Rachel Burger from Forbes cited the NACE study in a 2014 post and Jordan Weissman from The Atlantic cited the same study in June 2013. Weissman also cited a 2012 Intern Bridge study. It found, from among 11,000 respondents, that paid interns were twice as likely to get hired as were unpaid interns.

Secondly, paid interns were more likely to earn higher salaries. According to the same NACE study, the paid interns had an average salary of $51,930 a year. Those with unpaid internships or no internships at all had average salaries of $35,721 and $37,087, respectively.

But does this tell the whole story?

So, Are Paid Internships Better Than Unpaid Internships?

On the surface, that would appear to be the case. However, the studies missed one aspect: the quality of the interns’ experience. Sure, many paid interns might have excellent experiences. But it depends on how well companies set up their programs. Conversely, those unpaid interns may have had poor experiences if the companies they worked for didn’t properly set up their programs.

“Most companies don’t know what to do with their interns,” SJ says. Chances are the unpaid interns in bad situations had to fetch coffee or do other menial tasks, like in the “Black Swan” case. But their employers should have taught them transferable skills. In short, the employers didn’t teach their interns much, if anything at all. And those employers may be in clear violation of the FLSA.

Are There Any Benefits Business Can Give to Unpaid Interns?

Yes, if you consider the purpose of internships. Above all, interns should be beneficiaries.

Interns should learn. They need a great onboarding process so they can get acclimated to the company’s processes and culture. Ultimately, they need networking. And interns should develop the skills they need to get hired. Employers should provide that for paid and unpaid internships.

SJ continues: “I think all internships — if they’re set up correctly — are awesome for everybody because they’re helping [people] go from where they are to where they want to be.

Finally, companies should work hard to comply with all the laws. And they should pay interns when possible. In all cases, both the interns and the employers can benefit from internships. That might not mean full compliance with Rule #4, but when companies succeed, they can eventually acquire more employees.

Do you need help setting up your internship program? Check out our get virtual interns page to see what we can do for you.