Unpaid Internships - Common but Illegal

A common, but frequently unreported labor violation is the use of unpaid interns in violation of minimum wage and possibly overtime laws.  The scenario is fairly typical: a company offers an opportunity to ‘break into the business’ in exchange for the intern working for free.  You see many examples of this in the entertainment industry.  In fact, despite jobs sites such as Craigslist prohibiting the posting of unpaid “internships,” you can almost always find one posted.  Some companies try to get around the law by requiring that the internship be part of a college program.  However, there is no exception to the law allowed just because the “intern” may receive college credit.  While it might be possible for a college credit course to require some type of training for a company, the vast majority of these internships are in violation of Federal as well as California labor laws.

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.

Thus, if in the entertainment industry, you read scripts that have already been read and rejected by the company and the company will not use your input in any way but is simply instructing you on how to read scripts, then they would not need to pay you for your time.  However, if you read the scripts and perform any work that is used by anyone in the company to make any type of decision about that script, then you must be paid for your time.

Another common type of unpaid internship is in martial arts schools that require students to teach classes in order to receive additional belts.  This practice is illegal unless the student is paid for the time.  Because the act of teaching a class is work that benefits the employer, it must be paid for.   

The U.S. Department of Labor has outlined a list of criteria that ALL must be met in order for an internship to be unpaid.

1. The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
2. The training is for the benefit of the trainee;
3. The trainees do not displace regular employees, but work under close observation;
4. The employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion the employer’s operations may actually be impeded;
5. The trainees are not necessarily entitled to a job at the completion of the training period; and
6. The employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.

From the above list, #4 is really the key one – all the others will follow from whether the employer derives any immediate benefit from the activities.

The main reason that you do not see more lawsuits regarding unpaid internships is that the interns are very unlikely to sue.  In most cases, they fear being blacklisted, as they will undoubtedly need to use the internship as a reference to get any future work.

This is where California’s Private Attorney General Act comes in.  Because this law allows anyone at the company to sue for labor violations, even if they themselves are not affected by the violation, it is now possible for these companies to be brought into compliance with the law.  If you work for a company that uses unpaid interns and would like to put an end to this illegal practice, you should consider bringing a Private Attorney General cause of action.

Of course, if the internship is work, not only minimum wage must be paid, but also California overtime (8 in a day / 40 in a week) as well as meal and rest breaks.

Comments

[noelle]

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[Ruben]

I have to thank the person who let me to this blog. Very informative! I was 'interning' at an interior design firm, but all they had me doing was driving all over LA in traffic picking up samples, so I left and told them I'm not learning anything from sitting in traffic.
I will use this article as a guide. THANK YOU!!!!

[Portia Iversen]

What about bartering for labor? For example if I am starting a new small business and agree to share a percentage of the profit in return for services rendered (ie marketing and PR, etc). Thanks! -P. Iversen

[Richard Parker]

This original poster is definitely a fraud. Unpaid internships are totally legal and a lifesaver for students who have no previous work on their resumes except lifeguard or McDonalds. Further, the internships are voluntary, so students can take them or leave them for a paying internship. During this ecomonmic nightmare, these internships are as close to an interview as some students might get. When I was finishing college I would have done anything to get a good job, including volunteering or interning, not email my Mommy. I have also had unpaid interns in my company and they do not lessen your load, they add to it.

[mike]

Anonymous you are ridiculous please read the federal guidline they are clear

4. The employer that provides the training derives no immediate advantage from the activities of the trainees

To answer the question wht arent there more lawsuits. there are lawsuits. Although when the economy is good you don't see as much internship 'opportunities" funny how that works. now that the economy is weak there is much more attention on this matter and more lawsuits to follow im sure.

[Brian Stern]

Internships are legal as long as they meet theses standards set by the Supreme Court:

The six criteria, derived from the Supreme Court’s decision in Portland Terminal, are as follows:
The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
The training is for the benefit of the trainee;
The trainees do not displace regular employees, but work under close observation;
The employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion the employer’s operations may actually be impeded;
The trainees are not necessarily entitled to a job at the completion of the training period; and
The employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.
The Department of Labor has consistently applied this test in response to questions about the employment status of student interns. See, e.g., attached opinion letters dated May 8, 1996, July 11, 1995 and March 13, 1995 and WH Publication 1297 (“Employment Relationship Under the Fair Labor Standards Act”).

Cite: http://www.dol.gov/whd/opinion/FLSANA/2004/2004_05_17_05FLSA_NA_internship.htm

Full Law Details Here: http://www.doleta.gov/USWORKFORCE/wia/finalrule.txt

[blog internships]

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A medical intern is a term used in the United States for a physician in training who has completed medical school. An intern has a medical degree, but does not have a full license to practice medicine unsupervised. In other countries medical education generally ends with a period of practical training similar to internship, but the way the overall program of academic and practical medical training is structured differs in each case, as does the terminology used (see medical education and medical school for further details).

[SirEndure]

For heaven's sake people (remember, "heaven" is just an expression, not a truth), get out your dictionaries and spell correctly. There is no excuse nowadays with spellcheck on virtually every computer! There were some interesting comments here but credibility is compromised when text is misspelled and the writing is littered with bad grammar. Don't be lazy, proofread your work if you feel it is important. For shame...

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I think it's unfair that interns have to suffer from these disorders of the institutions I think they consider should resolve this as quickly as possible

[College Research Paper]

I appreciate the work of all people who share information with others.

[photo]

The issue here is not whether the intern should be paid or not. The issue is what kind of companies are asking for interns. I am a photographer and I often find internships for photographers at places like dance schools. It is obvious that these places want free photography services. Would a law student be willing to do an intership with a dentist. If the dentist needs legal assistance it would be stupid to assume that a law intern will be able to help him. Let's stop this none sence. If you are interested in helping students then teach them your skills not how to make your coffee.

[Eric]

Yeah, I am not sure why people think this is open to interpretations. Bottom line, if you are a non profit (i.e not a for profit business) then you can, by law, have unpaid interns. If you are a for profit business (meaning you charge and profit for your services) then you are required to pay at least minimum wage to anyone who works on behalf of your company. Dunkin Donuts or MacDonalds still has to pay thier employees while they are training them, so do you. That's just the way life works, and if these shady production companies don't comply, there are legal consequences.

[anon]

“We’ve had cases where unpaid interns really were displacing workers and where they weren’t being supervised in an educational capacity,” said Bob Estabrook, spokesman for Oregon’s labor department. His department recently handled complaints involving two individuals at a solar panel company who received $3,350 in back pay after claiming that they were wrongly treated as unpaid interns.

Here is your example of someone winning a case of being unpaid.

http://www.nytimes.com/2010/04/03/business/03intern.html

[Grant]

Lets get something clear. Most "legitimate" companies do not derive immediate benefits from their interns, whether they are paid or not. Internships for them usually means that an already overloaded employee has to take time out of his/her day to train and supervise one or more people, when that employee could probably have done the entire workload themselves with half the time and effort. In most cases the employee supervising interns actually has to spend a huge amount of time reviewing and correcting the interns work. Even if the intern were to get paid minimum wage, they would still be a drag on the company.

The benefit to the company comes from the hope that they have successfully trained potential employees to enter their industry and ensure a competent workforce in the future.

I have previously held four unpaid internships, two in California and two in Texas. Now don't get me wrong, there's nothing like getting paid for your work. There is however much more benefit to the intern derived from being given the opportunity to learn a skilled position in a real working environment (unpaid or paid), as opposed to getting paid minimum wage to get coffee and make copies while watching people work (which IS what you would be doing if you got paid -- do you think they're actually going to pay you for something you are not qualified to do?)

If you're going to take an unpaid internship, it is YOUR responsibility to research the company and decide whether the experience provided will be worth your time. If you don't take the time to look at multiple companies and find out what your responsibilities and gain will be working at each then you can only blame yourself if the internship is not what was expected. Also use common sense (don't let your employer make do inventory on a storage locker for nine hours straight if you're not getting paid to do so - probably not even if you are paid)

Now I guess I am a little biased being from Texas where you have the RIGHT to work and not the PRIVILEGE. Here we allow our business to flourish, and as a result we have plenty of jobs, we were the last state hit by the economic downturn, and we are still the only state experience economic growth while the rest of the country (California especially) is begging the government for a bail-out.

California is king of setting up government programs to combat every little issue that may tick someone off, while completely ignoring how they are supposed to pay for them. That's why you want money from the rest of the hard-working country to pay of your huge deficit.

With that said I am more that happy to let you Californians fight for interns rights. The result will be this: You will make it even less desirable for companies to hire interns so guess what, THEY WON'T. Then job market in California will continue to shrink as the state goes under, all the while a number of you are left jobless because you thought it was more important to get paid six dollars an hour than to actually have a decent learning experience.

All the while Texas will be smiling as California's businesses continue to move here where they will not only succeed but provide more jobs for us Texans.

[Craig]

Alicia cut the bullshit. The reason to use interns is because it's free labor. I don't give a crap if it's illegal or not. It's unethical in my eyes. I've been in the production industry in Hollywood for over 20 years and see the same bullshit over and over again.

The other day an editor, at an undisclosed company, needed some rotoscoping done (a very labor intensive time consuming job). Instead of doing it himself, he had an 'intern' do it for him. Six hours later he had some very good shots to use in his project. Did he train or guide the 'intern'? No! Why? Because the 'intern' already knew that particular skill from school.

So basically the company got a better product to sell because they used free labor. And that's why companies love using students with a film or production background. They don't need to teach them anything!! The 'intern' can come in and do productive work right from the start. Even teach a thing or two to the owner of the company. In my book that's called an Independent Contractor and not an Intern.

Bottom line? The company can now undercut the competition, offer a better product while keeping payroll cost below others.

[marek b]

The FLSA defines an employee as “any individual employed by an employer.” 29 U.S.C. 203(e)(1). Similarly, the FLSA definition of “[e]mploy’ includes to suffer or permit to work.” Id. The Supreme Court held over fifty years ago in Walling v. Portland Terminal Co., 330 U.S. 148 (1947), that the FLSA definition of “employ” does not make all persons employees who, without any express or implied compensation agreement, may work for their own advantage on the premises of another. Whether student interns are employees under the FLSA will depend upon all the circumstances surrounding their activities. For example, where certain work activities are performed by students that are simply an extension of their academic programs, we often would not assert that an employer-employee relationship exists for purposes of the FLSA. Thus, provided the six criteria listed below are met, where educational or training programs are designed to provide students with professional experience in the furtherance of their education, and the training is academically oriented for the benefit of the students, it is our position that the students will not be considered employees of the firm to which they are assigned. The six criteria, derived from the Supreme Court’s decision in Portland Terminal, are as follows:

The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
The training is for the benefit of the trainee;
The trainees do not displace regular employees, but work under close observation;
The employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion the employer’s operations may actually be impeded;
The trainees are not necessarily entitled to a job at the completion of the training period; and
The employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.
The Department of Labor has consistently applied this test in response to questions about the employment status of student interns. See, e.g., attached opinion letters dated May 8, 1996, July 11, 1995 and March 13, 1995 and WH Publication 1297 (“Employment Relationship Under the Fair Labor Standards Act”).

[marek b]

http://www.dol.gov/whd/opinion/FLSANA/2004/2004_05_17_05FLSA_NA_internship.htm

[State Labor Laws]

Hi,
This site is very good site and this website provides me a lot of information regarding state labor laws.This type of law is to protect those abusing the word "internship", and looking for free labor and not actually teaching someone something.It's provided me a good Knowledge.

[UNPAID INTERN]

This article assumes that students are babies who don't know what they are getting into .
1. A student gets works unpaid because he feels it gives him experience in the field or cannot get a paid internship .

2. A company hires unpaid interns because they CANNOT AFFORD to pay a student on the job .

If you force companies to pay interns a majority will stop hiring them. Guess who that hurts ? If students are not bright enough to realize which jobs will add to experience its no fault but their own .The government should not be their nanny.

I have learnt more in my unpaid intern than studying 4 years of engineering. I don't believe everyones case will be like mine but If the law is enforced in the name of protecting students who are so wet behind the ears they don't know whats going on , it ill hurt students who really have the opportunity to learn.

It boils down to do you think the government should regulate everything and take your decisions for you. Economics and history say no.

[State Labor Laws]

Hi,
Thank you for this posting. It was a great information I was seeking. I needed information on the California Labor Laws and this piece was very helpful. This site is really impressive.
Thank you.

[State Labor Laws]

Hi,
This type of blogs are very helpful and important. The knowledge of this blog is very useful for every employee. Thanks for this valuable information.

[Nathan Green]

The National Association of Colleges and Employers (NACE), which is the industry association in this field, has come out with their position statement that calls for reform based upon common practices and what is best for all parties. Below are their findings. In addition, they completed a survey where 95% of the participating schools permitted the posting of unpaid internships. I am not endorsing or condemning the current law or this blog, but rather sharing a key organization's opinion.

"Our position statement is framed by the following principles, beliefs, and assumptions:

- Internships provide unique and valuable experiences for students both academically and in professional career preparation.
- The term “internship” encompasses many different program models (i.e. paid and unpaid; full time and part time; of varying length; as a required part of an academic curriculum or as a course option; for academic credit or no credit). The broad use of this term to cover diverse circumstances makes it difficult to apply common and consistent standards, guidelines, and applicable policies.
- Internships exist or can exist in literally every kind of business, industry, organization, and sector—both public and private.
- What constitutes an internship is determined in the final analysis by the student’s college or university and the employer.
- Internship programs should ideally involve a close partnership between the university, the participating student, and the employer in which all accrue some form of benefit.
- The federal and state governments have significant roles in providing and enforcing laws and guidelines to protect the interests of both employers and employees in the workplace.
- Unpaid internships in the not-for-profit sector reflect the fiscal realities and limitations for organizations in that sector and are acknowledged accordingly in current Department of Labor guidelines and enforcement practices.
- All interns, regardless of their compensation, should enjoy similar basic protections in the work setting consistent with all laws, ethical considerations, and sound business practices.

Based on the above principles, beliefs, and assumptions, and the information supplied by our members, NACE’s position statement on the issue of unpaid internships is:

“The National Association of Colleges and Employers (NACE), representing more than 3,000 higher education institutions and employing organizations, recognizes the enormous value of internship programs to individual student participants and both the higher education and employer communities. We believe that the U.S Department of Labor criteria for assessing whether internships in the for-profit sector may be unpaid must be reviewed and further clarified to ensure they account for the incredible diversity of students, higher education institutions, and employing organizations involved in such programs. Further, all interns, regardless of their compensation, should enjoy similar, basic protections in the work setting consistent with all laws, ethical considerations, and sound business practices.”"

[JK]

U.S. Department of Labor has outlined a list of criteria in Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act - April 2010
http://www.dol.gov/whd/regs/compliance/whdfs71.htm

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