Legality of Internships

Here’s a statement, from The Unpaid Intern, Legal or Not in the 2 April 10 New York Times, whose truth is honored more in the breach than the observance:  “If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law.”

The U.S. Department of Labor’s Wage and Hour Division uses six criteria to classify a worker as a trainee (intern) or employee for the purposes of the Fair Labor Standards Act:

  • The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;
  • The training is for the benefit of the trainees;
  • The trainees do not displace regular employees, but work under their 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 conclusion of the training period; and
  • The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

(emphasis supplied)  Why does it matter?  If the work relationship meets all of these criteria then the worker is a trainee. If the relationship fails to meet all these criteria then the worker is an employee entitled to receive .  The article reports that federal and many state officials are investigating the legality of and fining employers  “but that it is unusually hard to mount a major enforcement effort because interns are often afraid to file complaints. Many fear they will become known as troublemakers in their chosen field, endangering their chances with a potential future employer.”

The linked Wage and Hour Division document explains some of the criteria.

  • Training Similar to Vocational School/The Primary Beneficiary of the Activity
    • In general, the more a training program is centered around a classroom or academy as opposed to the employer’s actual operations, the more likely the activity is training . . . [I]f the workers are engaged in the primary operations of the employer and are performing productive work (for example, filing, performing other clerical work, or assisting customers), then the fact that they may be receiving some benefits in the form of a new skill or improved work habits is unlikely to make them trainees given the benefits received by the employer.
  • Displacement and Supervision Issues
    • [I]f the employer is providing job shadowing opportunities where the worker learns certain functions under the close and constant supervision of regular employees, but performs no or minimal work, this type of activity is more likely to be a bona fide training program . . .
  • No Job Entitlement/No Entitlement to Wages
    • The parties’ expectations regarding the compensation and job opportunities are relevant but not determinative. Even when such an agreement exists, hiring workers who finish the training program is considered in determining whether an employment relationship exists, and frequently hiring such workers suggests that the workers are not trainees. Finally, if the worker is placed with the employer for a trial period with the hope that the worker will then be hired on a permanent basis (even if the worker is not automatically entitled to a job at the end of the period), then the worker is not likely to be a trainee during the trial period.

The article notes that some employers criticize the criteria, which are based on a 1947 Supreme Court decision, as outdated for an information- and service-based economy.  Nevertheless, they are the law.  Few of my student’s internships with for-profit companies would appear to satisfy all six criteria.

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  • Ethan Shibutani

    The article points out that the surge in unpaid internships is, “fueled by employers’ desire to hold down costs and students’ eagerness to gain experience for their résumés.” But is this such a bad thing? Personally, I think if it is a valuable internship that may lead to networking or potential job opportunities, then pay can be overlooked (from the interns perspective). I had an “internship” this summer and made minimum wage however I found it to be on the boring side. I would rather have an eye-opening internship and not get paid. You’d be hard-pressed to find an internship that matched the 6 legal criteria, so it seems like a revision of the law might need to be looked at.

  • Vaishakhi Mehta

    I somewhat agree with Katrina. Although I do not know how this really works in the US, I do feel that in an internship, the employer is receiving some kind of benefit which could be classified under unpaid labor. I also feel that a lot of internships especially with large firms do put pressure on students to give in their best, so that they may be eligible for a job after graduation. Although it is not guaranteed, internships could be counted as a stepping stone in attaining a job in the future. This simplifies the jobs of employers (pick the best of the interns) and simultaneously creates a greater pressure on students to do well without much gain in the short term.

  • Katrina

    Isn't this article (and arguments like it) the reason that most employers currently require that if an internship is unpaid, you be able to recieve college credit for your work? I guess that makes sense– you may actually be performing actions of significance or "performing primary work" for the company, but technically you are still getting some form of compensation, in the form of credit hours from your college instead of a minimum wage. Doesnt that just shift the compensation burden from employers to educational institutions, who are now required to give out credit hours for these internships (credit hours that a student may have actually had to pay for in the form of classes)? Im not really sure how this whole thing works, but it seems like employers are still getting away with taking free, unpaid labor and giving no compensation for it.