You can easily find a paying internship at any half-decent tech company, just interview around at a few places. Speaking as a developer, mentor, and interviewer: internships are where we get our best hires and are an extremely good deal for us — paying $25+/hr no benefits is a STEAL for us. And you should name and shame your current "internment" office, for being total assholes.
Disclaimer: not /currently/ an intern, for the protection of those interns.
$10/hr may dodge a lawsuit, but I think you'll have your interns bought out from under you by someone less cheap.
I think this is particularly important if you're trying to learn how to run a company rather than learn specific job skills.
If this company just let you tinker at their offices so you could learn, that seems fine. If you were producing production-quality work for free, well, that's a more complex problem. In that case, you're devaluing the work itself (giving away for free what would normally be sold). And while it's not going to have a huge effect if just you do it, if this scenario was allowed to become the norm it would impact the paychecks of everyone in your industry. Except the owners, who would love the overall cheaper labor.
And, just to say it: It's this sort lack of labor protections that lead to ever-widening income gaps. If companies aren't bound to pay employees fairly, the middle class gets poorer and the wealthy owner class gets wealthier.
(Postscript while comment score at 0. I take your downvotes to indicate 'no'. Which is about what I figured. :P)
My Airbnb host used to "hire" a Japanese kid to water her garden without paying him a cent. She told him it was an "internship" for her design company, and she told him by tradition and by default, internship is unpaid. That kid was paying very high rent to her already, obeying all kinds of house rules like "shower should be less than 5 minutes and only one time per day". He was nice enough to work for her for free for over a month. I don't think that kid knew about his right. That's where the laws should come in.
Thats not the rule of thumb. The rule of thumb is that if they're doing "real" work they need to be paid. In software that generally means anything that goes into a production service or release.
Am I supposed to be angry about this? They thought they were going to use pcap2har in their for-profit product, but in fact they didn't. Does that change anything? Today, I certainly wouldn't take an unpaid internship, having already been measured and found adequate. But for the company that first gave me a chance, I have nothing but gratitude.
I'm being sued by a former intern whom we paid a very respectable $15/hr for part time work over the summer; she's coming after me for like $100k because she alleges I wilfully misclassified her as a contractor rather than employee.
Bottom line: I won't use ANY interns. I say blame it on the millennials and generation entitlement. Drives me out of my mind that this person is trying to get rich off the back of a start up.
You simply made the mistake of assuming that because you call one of your employees an intern, that you are free to disregard employment law. That is not the case. Paid internships are subject to the same laws as a normal employment relationship.
Anyway, it's probably not the best idea to take advice about employment law from someone who thought interns were independent contractors.