Unpaid Internships, Are they Legal?

October 27, 2011
By Brady & Associates on October 27, 2011 3:13 PM |

In an effort to get a head start on the quest for gainful employment upon graduation from college, many students participate in internship programs offered by businesses through college and university career centers. Students use the internship programs to accumulate work experience while in school in order to enjoy a significant advantage over the competition. Unfortunately, for the studends, a great many of these internships are unpaid. Regardless, in a very uncertain job market, students are accepting no pay in exchange for the experience and a competitive edge.

The volume of available internships has grown substantially in the last few years. This growth results from many factors including cost containment by employers and the students' desire to add experience to their resumes. At Stanford University alone, the number of unpaid internships has tripled in the past two years. Estimates in 2008 indicate that as many as 50 percent of graduating students had worked in unpaid internship positions, whereas the figure from 1992 was 17 percent.

Federal and state regulators are worried that many employers are taking advantage of these programs in order to get free labor. The concern is that, depending upon how the internship is structured, it may be in violation of minimum wage laws. Many states are already investigating and fining employers for these violations. When M. Patricia Smith was the labor commissioner for New York, she ordered many investigations into various internship programs. Now in her capacity as the federal Labor Department's top law enforcement official, she is working with the wage and hour division to increase enforcement on a nationwide basis.

It is not always easy to enforce the rules, given that many students are hesitant to file complaints since they do not wish to begin their careers on the wrong foot or to develop a reputation within their field as a complainer or troublemaker, thus ruining their opportunities for full time, paid employment. However, two individuals in the film industry have filed a lawsuit in federal court in Manhattan against Fox Searchlight Pictures, the producer of "Black Swan." The suit alleges that the producer hired the interns and then directed them to perform menial work that should have been the responsibility of paid employees, rather than providing them with the necessary experience and following the specific rules that exempt employers from paying interns. The interns were hired as production assistants and bookkeepers, yet they were actually responsible for such duties as preparing coffee, delivering lunch orders for the staff, cleaning the office and removing the trash.

The federal labor department has very specific criteria for unpaid internships. Among them are that the intern does not displace a regular employee, the position must benefit the intern, and the training must be similar to what the student would gain through an educational system or apprenticeship program. Unfortunately, lawyers for many companies believe the criteria are obsolete and believe that the rules are rarely enforced.

Besides the issue of adherence to the labor department's criteria for unpaid internships, in many of these cases the intern is not considered an employee. Because of this misclassification, the intern may not be protected by employment laws regarding harassment and discrimination.

Nancy J. Leppink, the acting director of the Labor Department's wage and hour division said, "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." Her department is going after firms that do not follow the rules, while also seeking to educate employers, students and universities on the laws regarding internships.


Sources:

The Unpaid Intern, Legal or Not, The New York Times, by Steven Greenhouse, April 2, 2010

Interns, Unpaid by a Studio, File Suit, The New York Times, by Steven Greenhouse, September 28, 2011,