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Employers offering paid summer internships, despite federal rule changes

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New federal guidelines have made it easier than ever for employers to count interns as non-employees — and not pay them. But despite the changes, more employers are offering interns wages to go with the experience they gain. (Viorel Dudau/Dreamstime/TNS)

The nearly 100 interns arriving at Under Armour’s Locust Point campus from colleges around the country this summer will meet top executives, help design and sell sports apparel and learn to solve business challenges, all while earning a paycheck.

Summer interns at M&T Bank, Travelers Insurance and Johns Hopkins also are getting paid.

New federal guidelines have made it easier than ever for employers to count interns as non-employees — and not pay them. But despite the changes, more employers are offering interns wages to go with the experience they gain.

Bryan Kaminski, Under Armour’s director of university programs and recruiting, says paying the equivalent of entry-level salaries to interns, whom the company views as an extension of full-time workers, helps make those positions accessible to more people. This year more than 17,000 students applied for 98 spots.

“We get a lot of benefits,” Kaminski said. “Our interns bring energy. They bring perspective. … They bring passion about the brand. … We’re making sure that we’re competitive in the market and that we’re able to attract great talent. We’re going to continue to invest in the development of students and invest in the future of the workforce.”

Evan Robertson felt lucky to have snagged an internship on Wall Street this summer. The Morgan State University finance major will work for Bank of America Merrill Lynch in sales and trading. And he’ll get paid over the 10 weeks as an entry-level analyst.

Robertson, a 19-year-old rising junior from Northeast Baltimore, doubts he would have applied for the job had it been unpaid.

“I believe having that benefit will motivate you to work even harder and take the internship more seriously,” Robertson said. An unpaid internship “is like doing free work. Any student’s time is more valuable that that. In these positions, they give you real work to do, work that will help the firm and increase productivity.”

Robertson said he hasn’t come across many unpaid internships in his field. Last summer, he worked as an intern in At&T’s construction and engineering division, also paid.

M&T Bank plans to bring in more than 150 interns in a region that stretches from Baltimore to Buffalo this summer. As in the past, the interns, in commercial banking, investment banking, finance, credit and marketing will be paid, said Augie Chiasera, the bank’s regional president.

“When I was in the internship market, it meant a lot to me to get paid,” Chiasera said. “You approached the work in a different way. We ask them to work and provide value to our clients, and when you are joining us over the summer you should be compensated.”

Lines separating paid and unpaid internships haven’t always been clear. The Fair Labor Standards Act requires employers to pay employees, but students and interns are not always considered employees.

Before the U.S. Department of Labor updated its guidelines in January, employers were required to prove each of six factors before they could take on an unpaid intern as a non-employee. The new rules establish a test to determine the primary beneficiary of the work. If the intern benefits more, the employer does not have to pay.

The changes stemmed in part from lawsuits brought by interns over the past few years.

Courts have identified seven factors as part of the new test. One looks at the extent to which the internship provides training similar to an educational setting. Another weighs the extent to which the intern’s work complements, rather than displaces, the work of paid employees.

Employers can use any of the factors to make a determination.

Michael Schmidt is vice chairman of the labor and employment department of the New York law firm Cozen O’Connor.

“The new federal rule has provided much more of a flexible test for employers, which is probably better for employers across the board,” he said.

It’s still unclear how the changes will affect intern programs, Schmidt said, particularly because state labor laws can differ from the federal guidelines. Maryland uses the same test as the federal guidelines for paid versus unpaid internships, except in the case of work study programs.

Schmidt believes the new rules could have far-reaching implications. Businesses worried about complying could stop hiring interns rather than run afoul of the law. But others could reexamine their programs and restructure them to comply.

Even with the changes, college career center directors said they continue to see a mix of paid and unpaid internships.

Postings in a database at Morgan State show about 40 percent of internships are unpaid, said Seana T. Coulter, director of Morgan’s Center for Career Development. She said many students can’t afford to apply for them.

The Labor Department changes could make it easier for employers to not pay interns who apply for academic credit from their schools, said Julie Elliot, associate director for internships at Goucher College. Goucher students can earn credit during an internship, whether paid or unpaid, if they work with a faculty member and have the employer’s approval.

“We have students getting paid as well as pursuing unpaid internships,” Elliott said. “Students are still committing valuable time to support the work of the organization. They should be valued for that work.”

Coulter said Morgan’s career center encourages students who are considering unpaid internships to think about the long-term benefits of the experience.

“Some students are able to participate as a stepping stone, which leads to a paid internship in subsequent years,” she said.

It worked that way for Stephanie Douglas, 24, a multimedia journalism major at Morgan who spent the spring semester as an unpaid news intern at WBFF Fox 45 TV.

“I thought I’d be doing coffee and getting lunch for people,” she said. She was thrilled to find that she would be spending her time producing web stories and morning show segments, shadowing reporters and doing research.

Douglas began aiming for a career in broadcasting when she was in middle school. All her internships, including one at a radio station in Florida before she transferred to Morgan, have been unpaid. She has taken weekend jobs to help cover rent and other living expenses. But the experience is paying off: The spring TV internship has led to a paid, part-time production assistant job at the station this summer.

With a paycheck coming in, she’ll have flexibility to look for an additional summer internship, which she expects will be unpaid but give her additional experience toward graduation in December.

“The internship has more to do with your goals, whether unpaid or not,” she said. “This was not for the money. More for what you could get out of it.”

For Allie Sklarew, a rising senior studying public policy at Goucher, gaining experience is a bigger priority than earning a paycheck. Sklarew just started a two-day-a-week summer internship in the Washington office of Rep. C.A. Dutch Ruppersberger. She hopes to help constituents, offer tours of the U.S. Capitol and handle other tasks.

Last summer, she worked in the Rockville district office of Sen. Chris Van Hollen, and received a $500 stipend. This summer, Goucher awarded her a $2,000 intern fellowship to cover the cost of college credits and travel and other expenses.

She plans to work at a farmer’s market on weekends and is looking for a part-time job. She feels fortunate, she said, to be able live at home in Rockville and save money.

“To me, at this point in college, it’s so much more important to have the experience,” she said, and “whatever will get me in the door in government.”

Offering those experiences pays off for employers too, said Yariela Kerr-Donovan, director of strategic workforce development and coordinator of intern programs for Johns Hopkins Medicine.

The Johns Hopkins Summer Jobs Program plans to hire about 450 high school and college students to work in the health system and university, in human resources, information technology, finance, clinical units, research labs, the legal department and other areas. Students in the program, a partnership with the city’s Youth Works summer jobs program, work 30 hours a week for eight weeks. All are paid.

“Kids often need to work in the summer,” Kerr-Donovan said. “It’s good to understand what it means to earn money.”

Students learn about financial responsibility and budgeting, Kerr-Donovan said. And they gain exposure to careers they might not have known existed.

“It’s about that exposure and helping students recognize all of the possibilities,” she said. “In the long run, it will shorten the work skills gap we’re finding for certain occupations.”

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