The Case of Low Paid Interns' Exploitation

ABSTRACT

This paper discusses the practice of hiring interns by for-profit companies and using them as means to deliver immediate value in substitution by full-time adequately paid workforce. Despite the fact that hiring paid inters is legal, this paper questions the responsibility and ethics of such business behaviour. The discussion is based on the real-life experiences of students who undertook paid internships within the last year. This paper evaluates the practice by introducing a fictional case of a trial between The Illuminate Consulting Group (ICG), a boutique strategy consulting company based in San Carlos, California, and one of its former summer interns. As opposed to a traditional trial, the aim of the judgment was not to decide the legality, but the responsibility of the business practice in question. Reasoning is based on ethical theories pragmatically applied to the real-life business case. Additionally, the case cites the testimonials of "witnesses", namely eleven students with relevant experience, who expose the reality of paid intern experience and provide support for the final judgment.

INTRODUCTION

According to Perlin, the author of "Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy", in the reality of an economic downturn, internships has recently become "the principal point of entry for young people into the white-collar world". Some all well-paid and structured positions, but others aim at cheap or free labour exploitation. Perlin's study focuses on the abuses of interns' labour by large corporations, not-for-profits and government offices. But the empirical observation suggests that the practice of hiring low paid interns has recently become extremely popular among for-profit start-up companies, small and medium enterprises.

The case of paid internship employment is interesting from the ethical perspective, as the discussion does not concern the legality of such practice and provides a basis for broader debate on applying moral principles to managerial decision making. Some scholars argue that anything beyond the matter of legality might be admirable or blameworthy, but not inherent to business decision making (Hartman & DesJardins, 2008). Others argue that managers who acknowledge the impact of their decisions should evaluate not only what is legal, but what they, their employees and society consider as ethical (Anstead, 1999). Despite the fact that paid internships are legal and by many seen as a win-win arrangement, the regulations on intern employment are often ambiguous. Furthermore, it has been observed that interns have lesser bargaining power than their employers or full-time colleagues and are often exploited or misused by the companies they work for (Silcoff, 2012).

To evaluation is carried in a form of a case brief, summarizing a fictional trial between The Illuminate Consulting Group (ICG), an academic strategy consulting company, and one of its summer interns. As opposed to traditional cases, the aim of the fictional trial was to evaluate the ethical responsibility, rather than legality, of a business practice. In order to extent the scope of the discussion to evaluation of comparable behaviour pursued by other companies and provide general recommendations, the reasoning is supported with testimonials of eleven students with relevant experience .

The reasoning of the final holdings is based on two theories of normative ethics: Deontological approach of adherence to ethical rules based on Immanuel's Kant Categorical Imperative and John Rawl's Contractarianism (1) as well as Virtue Ethics with an implication for integrity of business practice (2). Dissent reasoning is based on Libertarianism (3).

CASE

Summer Intern v The Illuminate Consulting Group (ICG); 2012

Plaintiffs: An Intern employed at ICG during summer 2012

Defendant: ICG, an international academic strategy consulting firm.

FACTS

For the last six years (2006-2012), ICG has hired four to five interns every summer to work directly on client deliverables. The company has never employed more than two full time employees, who, nevertheless, were not physically present at the office, but worked remotely from different countries and could not provide any support for the interns. The interns worked for a minimum wage with no eligibility to overtime payment, coverage for food, accommodation or travel expenses. The majority of client deliverables was produced by unsupervised interns, and then presented to clients as someone else's work. Finally, the real position, experience and background of interns were deliberately concealed from the clients.

ISSUE

Whether hiring low-paid interns as substitute to full-time, adequately compensated workforce is ethically responsible business behaviour.

The issue is discussed on the basis of Funk and Wagnalls' (1952) definition of ethical responsibility - "a status of organizational character considered as capable of responding to the obligations established by a moral law or by ethical principles and ideals however derived".

HOLDINGS

The practice of hiring low-paid interns as a substitute to full-time adequately paid employees undertaken by for-profit companies is an irresponsible business behaviour.

REASONING

(1) Deontological Ethics

Can ICG universalize its maxims?

According to deontology, a theory which received classic formulation in the writing of Immanuel Kant ; it is the motivation behind any action what determines its morality. According to Kant, if an action is to be a moral action, it must follow a rational, universal and self-consistent principle (Sandel, 2010). Let's consider two aspect of ICG's behaviour: Hiring interns to fulfil full-responsibility positions for inadequate pay (1); Lying to clients about the interns' position and experience (2). As actions or behaviours are individual in their nature, to determine their ethical responsibility, we have to determine whether the maxims they descendent from can be consistently applied. The logic answer is no. First practice, stated as an imperative rule, would say: "Pay the lowest that any capable candidate is willing to accept". This rule, when universally applied to the modern economy, would result in restriction