Hire Wire Aug 03 2011

No Pay? No Problem

By kelly eggers

Would you work for free?

In FINS' informal online question forum, Sign or Decline, 55% of 306 respondents said they would decline a job if they would not get paid for the first three months.

Once thought to be the exclusive domain of college students and recent graduates, unpaid internships have become more popular among experienced workers. Those looking for work after being laid off are settling for low- or no-pay internship roles to keep their skills relevant with the hope that they'll be brought on as a full-time employee once the internship is over.

According to an April survey from the National Association of Colleges and Employers (NACE), 58% of 266 employers surveyed reported converting interns into full-time hires.

Employers, looking for ways to cut costs during the recession, have been happy to create these unpaid opportunities.

"The temptation is higher for employers who want people to work cheaper or for free," says Brent Longnecker, CEO and Chairman of Longnecker and Associates, a Houston-based compensation consultancy, "and one way they can do that is through internships."

Aside from unpaid internships, non-traditional pay packages are becoming more common.

Take start-ups, for example. In their nascent, under-funded stages, many employees will take little or no pay for a period of time, instead accruing salaries or bonuses that they'll collect when the company reaches a revenue target or gets a large investment. Early staffers at online radio service Pandora, for instance, were asked to stay on for no pay for over two years while the company struggled to stay afloat. Instead of cash, they got stock options, which they were able to cash out when Pandora went public in June.

While taking unpaid work might be what your career needs, ask a few critical questions before deciding to do so.

Can I Afford It?

"You need to make sure you have enough money to do this for a while," says Peter Handal, CEO of Dale Carnegie Training, a Long Island, N.Y.-based training and employment consultancy.

You also need to consider the expense you'll incur by working for no pay.

"'Free' is one thing, 'reimbursed' is another," says Longnecker. "It's not uncommon for a company to offer a stipend" to its unpaid interns, he says. Asking the employer if they'll contribute money toward your lunch and commuting expenses isn't unreasonable, he says. Getting good experience may pay off in the long run, but it may not be worth accruing more debt than you can handle.

Is This the Real Deal?

Recession-weary companies may be more interested in free labor than in offering you the opportunity you're looking for in an unpaid position.

Beyond the company research you should always do before accepting a job offer, Handal says you should read between the lines of the offer letter, and have a keen eye when surveying the office environment. Are employees happy, is there a hum around the office? That says a lot when compared to a dead, near-empty workplace.

"Figure out if it's smoke and mirrors, or a real opportunity," says Handal.

It's not only about the honesty and dishonesty of the people you meet with, it's also about their forthrightness. "Ask them why the job isn't a paid position," Handal says. "It could be a start-up, where they believe in the concept and think it'll be a big hit," he says, "or they could have just fired everyone, and they just really need someone to answer the phone."

Is There a Promise of Pay Later?

Try to find out how long it might be before you are paid or considered for a position.

"Figure out exactly how long the no-pay period is going to last," says Handal. "Is it one, two, three months? Tie that down so you can lay the groundwork for the next steps."

Talk with them about the possibility of being picked up as a full-time, paid employee after that period, he suggests, and see if they'll agree to an end-of-year bonus that makes up for part of that three-month period. You can also see what other kinds of benefits they'll offer, like flex-hours or stock options.

"Companies need to explain what's at the end of the rainbow," says Longnecker.

Is This Legal?

The practice of hiring unpaid interns is closely scrutinized by the Department of Labor.

"You need to make sure the company is doing everything around the fair labor standards and the Department of Labor," says Longnecker. "They're very sensitive to employers taking advantage of their employees."

Make sure that the company is above-board and that you are an official associate of the company, and not just someone who shows up to make copies.

Has This Worked Out Before?

Knowing the company's track record of hiring and holding on to its interns or unpaid employees is a good indicator of what your experience will be like.

"What I want to do is see other successful interns who have gone through this program," says Longnecker. "Ask if you can talk to people who have completed it, and see if they'll share the pros and cons."

You want to make sure that if they say they'll consider you for a paying role after a certain span of time that they actually keep their promise, he says.

What Would You Do?

Answer the question and see how you match up with the rest of the FINS community.

You've just been offered your dream job, but... you don't get paid for three months.

Sign ...or... Decline

Write to Kelly Eggers

Sign or Decline is a series of questions on FINS.com that ask what you would do for your dream job. Since its launch late last year, over 100,000 answers have been received and compiled in our database. Participate in Sign or Decline here.

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