In order to qualify as an unpaid internship, the requirement is simple: no work can be performed that is of any benefit at all to the company. That is, you can not deliver mail, sort files, file papers, organize a person’s calendar, conduct market research, write reports, watch television shows and report on them, read scripts, schedule interviews, or any other job that assists the employer in any way in running their business.
Examples of internships that have been legal are where the job is a “dummy” job. For example, there was a case of an internship for working on a train. The company had the interns driving trains from one end of their yard to the other under close supervision. The moving of the trains was completely unnecessary and was just being done to train the potential employees. As such, no “work” was being performed, so the internship was legal. On the other hand, if the workers were moving the trains as part of the regular re-positioning of the trains, but were still performing it under close supervision, they would be required to be paid for the work.
Mark Cuban is pretty angry about this. He says unpaid internships should be 100% legal, and the government is being short sighted.
I could see where this law can be useful though -- in cases where workers start getting abused in various situations. It can be used as a way for companies to skirt minimum wages.
When running a business, you typically try to think about the value-accretive things in life, e.g. letting an unpaid inexperienced person get valuable experience... but when making laws, policy wonks must think about the base realities of how humans will exploit the laws and each other.