Saturday, April 3, 2010

Unpaid Internships

Intern No doubt following up on Charlie Sullivan's post on unpaid law student internships, Steven Greenhouse at the New York Times has a story on the more general use of these internships.  It's obviously been an issue for some time, but the bad economy has given employers more incentives to pinch pennies and made interns more desperate for experience, even the unpaid variety.  These internships can provide valuable experience and lead to a good job, but they can also undermine the purpose of wage laws and highlight class problems when only more wealth students can afford months of unpaid full-time work.  From the article:

With job openings scarce for young people, the number of unpaid internships has climbed in recent years, leading federal and state regulators to worry that more employers are illegally using such internships for free labor.

Convinced that many unpaid internships violate minimum wage laws, officials in Oregon, California and other states have begun investigations and fined employers. Last year, M. Patricia Smith, then New York’s labor commissioner, ordered investigations into several firms’ internships. Now, as the federal Labor Department’s top law enforcement official, she and the wage and hour division are stepping up enforcement nationwide.

Many regulators say that violations are widespread, 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 Labor Department says it is cracking down on firms that fail to pay interns properly and expanding efforts to educate companies, colleges and students on the law regarding internships.

The story also notes the DOL's criteria for legal, unpaid internships, including similarity to academic or vocational training; no displacement of regular, paid workers; and that the employer derive no immediate advantage from the intern.  That last one, in particular, seems hard to reach in a lot of cases.

Remember that you heard it here first.


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Greenhouse may have been tipped by an Economic Policy Institute policy memorandum on unpaid internships that was released on April 2. It's worth a look for those who are interested:

Because I've been interested in the topic for many years, I've incorporated it into my Employment Law course as a way of livening up the who-is-an-employee discussion, and light bulbs can go off when it hits home like this. In a 2002 law review article, I emphasize both unpaid internships and the status of interns under discrim law, and there are good stories on both aspects.

On the latter, there's a remarkably egregious instance of a rejection letter received by a 41-year-old applicant for an editorial intern position with The Atlantic magazine. The letter is worth reading out loud in class -- it never fails to get laughs and even gasps.

I posted the piece to SSRN:

Posted by: David Yamada | Apr 4, 2010 6:08:32 AM

Those are great! Thanks, David.

Posted by: Jeff | Apr 4, 2010 7:47:53 AM

I imagine this will hit home with my Employment Law students when I mention it in class today. We use Doug Leslie's CaseFile method in the class, and for his coverage of the FLSA, Doug includes a casefile involving wage claims by "trainees" at a wildlife adventure company. The file does not specifically address the issue of interns, but poses a hypo of a company requiring applicants to go through an extended, unpaid training program before they can be appointed to a paid position. The court decision in the case file bearing on this situation is Reich v. Parker Fire Protection District, 992 F.2d 1023 (10th Cir. 1993), which sets out the factors considered by courts in deciding whether "trainees" are entitled to be paid. Reading the Times article immediately brought this to mind.

Posted by: Art Leonard | Apr 5, 2010 7:06:31 AM

Do the rules differ for government agencies? Even the department of labor itself offers unpaid internships.

Posted by: CC | Apr 5, 2010 4:15:07 PM

CC, the rules do differ for government offices, as well as charities and non-profits. In those contexts, interns need not generally be paid, nor need other volunteers (although things may get complicated if paid workers also volunteer). The statute and the DOL's interpretive regulations treat those workplaces differently for a number of reasons.

Posted by: Marcia | Jun 8, 2010 11:22:56 AM

Some Questions: What happens when the internship is in a another country, unpaid, does not offer academic credit, and students are made to submit resumes and letters of interenst, pay a fee, and sign a contract for service as part of the process? Same facts as before but add that it is with for-profit law firms and students are giving 160 hours of unpaid legal research and writing in exchange for a something to put on their resume? Just so you know, this is actually happening, in Paris, and I am challenging the situation.

Posted by: A.D. Mason | Jun 21, 2010 5:07:22 AM

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