Challenging Legality of Internships

In class a few days ago we discussed that many–or most–unpaid internships the college students use to pad enhance their resumes fail to satisfy the U.S. Department of Labor’s criteria for unpaid trainee positions and should therefore be compensated positions. (For background see here, here, and here.) Almost all students who spoke on the topic agreed the system was exploitative but they were willing exploitees, willing to work for free to get the company’s name on their resumes. There was no Norma Rae ‘”Union” moment. While one student was sharply critical of these practices most accepted it without complaint and, indeed, with little apparent recognition of why I would raise it as an issue–a small reminder of the differences between students today and my college classmates. Talking about this at dinner a few nights later a friend noted that the reaction likely would have been different at, say, Bunker Hill Community College, where many students could not afford a summer of unpaid work. She noted that some interns have sued over internships that did not provide bona fide educational experiences and expected companies would soon change their internships practices. Based on my students’ passive acceptance of the way things are I don’t share her belief in the imminence or inevitability of change. Unless the change that occurs is revision of the Department of Labor’s rule to ratify most current practices.

More on Legality of Internships

Here’s a link to a recent NPR story titled Unpaid Interns: Real World Work of Just Free Labor?  It’s timely because in last week’s class we discussed this very issue and because students are scrambling to line up next summer’s employment, paid or unpaid. (Thanks to SS for the article, and for great behind-the-scenes engagement and suggestions.)

Colleges and Internships

A few months ago I posted about the legality of internships, mentioning the U.S. Department of Labor’s Wage and Hour Division’s six criteria to classify a worker as an intern or employee under 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.

The Times article and my post noted the exploitive nature and questioned the legality of ubiquitous unpaid internships.  Students believe they have no choice but to take unpaid internships for experience, to add a line to their resumes, to get a toehold with a prospective employer. The typical unpaid internship doesn’t appear to survive scrutiny using these criteria.  It is not similar to vocational or educational instruction. Interns often perform either routine clerical tasks that would otherwise be performed by paid employees or menial make-work tasks of little educational value.

That post was based on a 2 April 2010 NY Times article titled The Unpaid Intern, Legal or Not? Last Sunday–3 April 2011, a year and a day after the linked article–the Times ran an Op-Ed article titled Unpaid Interns, Complicit Colleges.  (The timing may be coincidence, or may reflect this issue appearing on the Times’ radar as students apply for summer positions.)  The article’s author, Ross Perlin, is the author of  “Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy.”  His article addresses how colleges enable such internships by providing course credit for them, thereby “helping companies skirt a nebulous area of labor law.”  He notes that “[e]mployers and their lawyers appear to believe that unpaid interns who get academic credit meet [the listed] criteria, but the law seems murky; the Labor Department has said that ‘academic credit alone does not guarantee that the employer is in compliance.’”  A group of university presidents has assured the Labor Department that their “‘institutions take great pains to ensure students are placed in secure and productive environments that further their education,’” but the reality may be different.  Only 30% of 700 colleges surveyed by the National Association of Colleges and Employers required that students obtain academic credit for unpaid internships. Charging students for such internship-related credit is, in Perlin’s words “a cheap way for universities to provide credit–cheaper than paying for faculty members, classrooms and equipment.”  Perlin asserts that the 70% of those surveyed who do not require students to obtain academic credit are “evidently . . . willing to overlook potential violations of labor law.”  He cites his interviews with college career centers which “flatly denied being able to ‘monitor and reassess’ all placements or even postings” as the group of university presidents claim they do.

Students’ acquiescence in this exploitive system does not make it palatable.  They have little choice but to acquiesce if they want something other than an entry-level service industry job.

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 minimum wage.  The article reports that federal and many state officials are investigating the legality of internships 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.