Are Unpaid Internships Illegal?
Years ago, college was branded as a sure way to find job security. While that may still be true, the workforce has had to adapt and shift in order to support the increasing number of students attending school in search of new career options. One of the ways many industries have sought to accommodate this expansion is through unpaid internships. Recent studies have determined:
- More than 500,000 students nationally, across all industries, are currently interning for free. Additionally, there has been an increase in the number of professionals and graduates also finding their options limited to unpaid internships, especially in high technology areas.
- 2.6 percent of graduates are working in their field unpaid for companies that have no intentions to eventually hire for a wage.
- Starting salaries are actually lower for people who have completed an unpaid internship ($35,721) than those who have not ($37.087).
However, students, graduates and even unemployed professionals continue to accept offers of unpaid work. This phenomenon can be attributed to:
- High unemployment rates in metropolitan areas
- Companies relying more and more on technology to effectively run their businesses. Many unpaid internships are offered by cash-strapped startups, with a need of free labor.
The idea behind unpaid internships hinges on the worker being compensated with experience, a well-rounded resume, and potentially a positive reference in place of money. While the idea of labor without pay may seem ludicrous and possibly illegal, the federal government has generally deemed the unpaid internship as perfectly legal. They have determined that companies can offer “pay” in the form of valuable workplace skills, so long as certain criteria are met.
When Is an Unpaid Internship Legal?
Non-profit unpaid internships are generally permissible. However, private unpaid internships have been challenged, and with some success. As more industries begin to utilize them, the law will continue to evolve and settle. This is particularly true since labor laws are typically wide reaching and tend to focus more on issues involving documented employees and pay, rather than a complete lack thereof.
Under federal law, “employed” is interpreted broadly, and includes the phrase “suffer or permit to work”, as part of the definition. The Supreme Court has held that phrase cannot be interpreted as requiring monetary compensation when the work done by an employee (or intern) only serves the interests of that employee (or intern).
As the Supreme Court and Department of Labor (DOL) evaluated the issue, they put together a list of six criteria to be considered when determining whether a job was strictly for the employee’s benefit - such as educational experience - or if the employer benefited unjustly. The six factors that the DOL has decided must be met for a private unpaid internship to be legal are:
- The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment.
- The internship experience is for the benefit of the intern.
- The intern does not displace regular employees, but works under close supervision of existing staff.
- The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded.
- The intern is not necessarily entitled to a job at the conclusion of the internship.
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
Moreover, the more that an internship is structured in or around an educational setting, the more likely a court is to determine the internship is perfectly legal without compensation.
Lastly, it is important to note that some of the factors above can be satisfied by a mere agreement between the intern and the employer. However, a couple can only be satisfied by the employer suffering a burden and implementing a structured program exclusive to their unpaid interns.
When Is an Unpaid Internship Illegal?
The above criteria are clearly not entirely dispositive as to whether an unpaid job is legal or not. Recently, lawsuits filed against Fox Searchlight Films and PBS by interns have served to demonstrate that the work being done by the intern, rather than the title they are given (or even if the internship is in direct connection with a school), is more indicative as to whether the internship is illegal.
Therefore, the analysis is incredibly fact specific. For instance, take an intern at a newspaper who works long hours, picks up coffee and lunch, is writing and published in the paper regularly and is conducting investigative research on their own time, with little or no supervision. The Court may rule, in this case, the unpaid internship may be leaning more towards an illegal unpaid job.
Should I Seek Legal Advice?
The law concerning unpaid internships is a complicated, vague collection of more traditional employment laws. As unpaid internships continue to be part of the status quo, these types of lawsuits will undoubtedly continue. If you believe your current internship, or one from the past, utilized your employment in an unfair way, they may have violated the Fair Labor Standards Act and state employment laws. Contacting an employment law attorney is the best way to learn about your rights under the law and any legal options you may have.
Where Can I Get More Information?
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