Tuesday, April 6, 2010

The 6 Requirements for Unpaid Internships

Are unpaid internships illegal? A recent New York Times piece suggests that many of them are. Nancy Leppink, acting director of the Department of Labor's Wage and Hour Division is quoted in the article as saying,
"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."
She pointed to the six federal legal criteria in a document published by the DoL.

This topic has been getting some coverage in the blog circuit from Volokh Conspiracy, NOLA, and Neatorama. The DoL document identifies a six-factor test under the Fair Labor Standards Act to evaluate whether a worker is a trainee (and therefore the FLSA's minimum wage and overtime provisions are inapplicable), or an employee:
1. 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;

2. The training is for the benefit of the trainees;

3. The trainees do not displace regular employees, but work under their 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 conclusion of the training period; and

6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.
Number four is a real doozy! I personally view unpaid internships as mutually beneficial transactions. Student gets experience, resume content, and instruction. Employer gets unpaid work. The FLSA framework creates more of a charitable giving scenario in which employers are expected to provide busywork (that is in no way actually productive) to students in return for absolutely nothing. That sounds less enticing to both parties if you ask me. But maybe it will prompt some employers to start paying their interns.

Update (4/7/2010): Time Magazine recently ran Working for Free: The Boom in Adult Interns (HT @TBEmploymentLaw). John Stossel has also offered his "Take" on the issue.

Update (4/21/2010): DOL Issued a Fact Sheet on this Topic.

Posted by Philip Miles, an employment lawyer with McQuaide Blasko in State College, Pennsylvania.