It’s May. Soon, the kids – drinking age and younger – will come seeking internships. So, this is the season when accounting and legal bloggers do a post on the legal treachery of using unpaid interns. And, we are no exception.
Let’s say you are tempted to take the offer of free labor. After all, you did unpaid intern work. Working for free is part of the journey. Turns out we got suckered. Many unpaid internships violate laws around employee wages.
Here is basically how it works. Federal[i] and state laws require all employees to be paid minimum wage (and overtime if they do the time). Non-employees aren’t entitled to be paid. But the definition of employee[ii] is a deliberately broad net, so only a few workers fall through the holes.
The federal Department of Labor tried to clarify this by picking 6 things that make an interning worker in a for-profit business a non-employee.
1. The work is similar to training the intern would get in an educational environment
- The internship is built around a classroom or academic experience
- The internship is not built around the employer’s existing operations
- A school oversees the program
- The intern gets school credit
- The program is designed to give intern skills that can be used in other environments, not just in the employer’s business
- The intern does not perform routine work
2. The internship experience is for the benefit of the intern
- The Intern performs no or minimal work
- The business is not dependent on the intern
3. The intern does not take the work or position of a regular employee and works under close supervision of existing staff
- Interns do not substitute for a regular worker
- The internship is not an alternative to hiring someone or making staff work more
- The intern is shadowing someone else
- Intern receives more supervision than what he would experience as a regular employee
4. Employer gets no immediate advantage from the intern’s work (and sometimes the internship disrupts company work flow)
5. The intern is not entitled to a job when the internship ends
- From the beginning, the internship is for a fixed period of time
- The internship is not just a trial period for a new or potential employee
6. The intern understands he isn’t getting paid
If these six factors don’t accurately describe your internship program, then the intern is probably an employee. Refusing to treat your intern as an employee is a violation of the law.
And, companies are getting sued by their interns for violations of the wage and hour laws. Interns who worked on the Charlie Rose Show, the movie Black Swan, and accessories for Harper’s Bazaar have sued the companies who ran the programs. Here is the website set up by the employment law firm to attract more plaintiffs.
The point of the wage and hour laws is to make sure that employees cannot agree to work for free, because that skews the job market and makes productive people financially unproductive. So, if you want cheap labor this summer and you want to be both compliant and safe, then treat your intern as an employee. And, if you don’t want to treat your intern as an employee, call your employment lawyer and ask her what she thinks.
PS: Can I express some ambivalent opinions? I believe in wage and hour laws. I believe that companies will take slave labor as long as they can, which depresses wages all over. I also believe that people take the unpaid jobs because they hope it will lead to other things. On a small scale, this is fine. But, on a broader scale, it depresses wages and creates a compensation race to the bottom. I also wonder how many people in creative fields got their feet in the door through unpaid internships. But, I also wonder whether the availability of free labor means that creative fields become the province of kids with a head start who have other sources of cash to enable them to give their time for free. I wonder how much diversity we lose in the creative fields as a result of the system.
Also, it looks like the law firm representing the plaintiffs, Outten & Golden LLP, is trolling for clients and causing the suits to happen. Typically, I think this is a shoddy practice, particularly in class actions against public companies and IP trolls like Righthaven. Here, it’s not as clear. Wage and hour laws exist and should be followed. If we don’t like them, we should change them. As long as they are on the books, we should comply with them. But, the government doesn’t always do such a terrific job of policing employer trangressions, particularly now that busines lobbies have swamped the public sector. So, maybe when government fails, private industry becomes the cop on the beat, driven not by concern for the common good, but by hunger for profit. Maybe relying on private plaintiffs firms to investigate and (civilly) prosecute bad employment practices is just one of the fruits from the outsourcing tree. What’s good for the goose…?
[i] Fair Labor Standards Act and similar state laws.
[ii] Under the Fair Labor Standards Act (FLSA), “employ” means “suffer or permit to work.” People who are “suffered or permitted” to work must be compensated under the law for the services they perform for an employer.