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

[State Labor Laws]

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[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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[Charlotte]

I created a customer database for a CL poster, a designer. She wanted me, on my own time, to get her name into Social Media/Networking. Took my pay, and said, "No."

I started watching CL, Indeed, and Simply Hired for social media internships. Wow! It seems like everybody wants an intern to create a website, a logo, a blog, Twitter about their brand, get their ads on Facebook. It is huge!

These business owners can't afford to pay what this would cost. They run ads for "interns" to do it for nothing in order to widen their sales market and get their brand/name out there. There is no training here. This is pure exploitation solely for the profit of the business.

I believe this is totally wrong. When these ads appear on CL under "pay," I flag them every time.

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All of the people who slap themselves on the back for helping out students while not paying them have already convinced themselves that they are doing the right thing. They are not, ethically, morally, if not legally. The minimum is greater than zero.

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Current United States Department of Labor interpretations can be found here http://www.dol.gov/whd/regs/compliance/whdfs71.pdf