According to a recent article in Slate, some companies are now asking job candidates to complete entire projects prior to be considered for a position. These are not tests, but actual projects that, when completed, have financial value to the company--regardless of whether they actually hire the candidate.

In one case, the candidate was asked to complete 30 hour assignment. In another, the candidate did prep work for an upcoming event. In another, the candidate wrote an article that later appeared, uncredited, on the company's website.

None of those candidates were hired.

Using a job as a carrot to get free labor is nothing new. Twenty years ago, a market research firm asked me to develop a new consulting service. I spent about a week creating the concept, identifying how the research would be conducted and produced a sample report. They later launched the service without hiring me nor paying me for developing it.

Thousands of freelancers and consultants get similarly burned every day. They're so anxious to land a contract that they'll work up a detailed proposal that would otherwise cost the prospective client many thousands of dollars to develop themselves. Thus armed, the "client" decides to execute the plan without its creator involved.

For example, a friend of mine designs high-end corporate events for huge media companies. More than once he's developed an entire, highly-original design concept--several weeks of work drawing on unique expertise--only to see the company steal the design and try to execute it on the cheap.

Similarly, I recently spoke with a marketing executive whose company does $100,000 projects revamping websites to generate more sales. His marketing concept was to do an analysis of a prospective customer's website and send them a 30 page report explaining what they need to change to get more customers. His complaint was that they would often try to do it themselves. Well, duh.

The same kind of thing goes on with internships. While some people sometimes segue an unpaid internship into a job, I strongly suspect the reality more often resembles this iconic scene from the HBO show Girls. (Note: two f-bombs at 2:30):

With all of that in mind, here's an absolute, universal truth: once you work for free, you've set the value of your work at exactly $0 per hour.

That's why the  #1 rule of capitalism is never work for free.

Unfortunately, today's corporate cultures (having largely been freed from unions and regulation) have become addicted to people working for free. (E.g. paying people for 40 hours a week but getting 100 hours). Because of this, it's hard to avoid being asked to work for free. If this happens, here's what you do:

1. Take a step back.

Consider whether you want to work for or with a company that either doesn't value your work, value you as a person, or possess a basis sense of fairness. If you do end up working for them (for pay) at some time in the future, you'll probably get screwed over sooner or later.  

For example, the company that stole my work (mentioned above) did eventually hire me for some other projects. I eventually had to get lawyers involved to get paid for some $50,000 worth of work I did for them. Huge hassle but lesson learned.

2. Devise a quid pro quo.

If you really feel you MUST take advantage of this "opportunity," always set up some kind of swap so that you're not actually working entirely for free. For example, if you're asked to prepare a detailed proposal (more than, say, a letter of intent), insist upon presenting that proposal personally to the CEO.

Similarly, if you're being asked to work an unpaid internship (note: college credit is a form of payment), lock down some specific actions the people you'll be working for will take on your behalf. For example, "OK, but since this is unpaid, I'll only do it if you agree to introduce me to at least five of your personal contacts who might hire me."

3. Defend yourself from exploitation.

Even when you get a quid pro quo, you must protect yourself from anything that sets the value of your work lower than it ought to be. To do this, use any or all of the following techniques:

  1. Get a non-disclosure agreement. This is what my event planning friend does. Before presenting an original design to a client, he requires them to sign a legal document stating that they can't disclose that design to anybody outside of their organization. It doesn't prevent DIY, but it does prevent them taking that design to a lowball competitor.
  2. Copyright your work. If you create any document that has financial value, slap a copyright notice on every page. Such notices are not of much legal value, but they reminds the other party that you're not providing them automatic permission to use your work as if it had been created by an employee.
  3. Invoice the other party. If you perform any labor that is of financial value to the other party, regularly present them with invoices showing the estimated value of the work. Stamp the invoice "COMPLIMENTARY." This reminds them that your work has value and clarifies they "owe you" whatever quid pro quo you've negotiated.