Guest Column - September 2010
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Internships & the Law

By Susan Foster and Gil Fried

Are you a legal scofflaw? We are not talking about bank robbers or someone driving three miles over the speed limit. We are talking about a common practice—unpaid internships. While we all feel that people should pay their dues, when are we crossing the line between helping someone launch their career against saving money by not paying interns? In other words, are organizations violating the Fair Labor Standards Act (FLSA) by filling previously full-time employment positions with an unpaid or underpaid intern?

Generically, an intern is defined as: A student or a recent graduate undergoing supervised practical training. The key to this definition is that the student is receiving practical training, not that the employer is receiving free or cut-rate employees. The federal government does not define an intern for private business. They do have formal definitions for volunteers, student learners, learners and apprentices. With the exception of volunteer, the federal government still requires some form of payment to individuals performing in these capacities. The Code of Federal Regulations (29 CFR § 553 - 2007) defines a volunteer as one who "performs hours of service for a public agency for charitable reasons without promise expectation or receipt of compensation." An unpaid intern would not fall within the scope of either of these definitions in most internships. Nancy J. Leppink of the Labor Department recently told the New York Times, "[I]f 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."

In fact, utilizing a "free" intern is not just a possible legal concern, but a major ethical dilemma. In one survey almost 77 percent of students said they need to work second jobs in order to also take part in an unpaid internship, according to a recent Intern Bridge report. This restricts a full-time commitment a student may wish to make to an organization and both parties suffer.

The Department of Labor (DOL) issued Fact Sheet #71 April of 2010 detailing six criteria an internship must meet in order for an intern to be unpaid. In essence, the DOL looks at an unpaid internship as a training program, not an employment program. The six criteria include:

  1. 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.
  2. The internship experience is for the benefit of the intern.
  3. The intern does not displace regular employees, but works under close supervision of existing staff.
  4. 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.
  5. The intern is not necessarily entitled to a job at the conclusion of the internship.
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.