Illegal Internships?

With a shaky economy, job listings for college students are already low, but numbers could decrease further due to increased regulation from the Department of Labor.

President Obama, the Department of Labor, and certain states—California among them—are beginning to investigate the legality of unpaid internships in the for-profit sector. Specifically, state and federal governments worry that companies are taking advantage of college students.

Due to the economic downturn, more unpaid internships are being offered from for-profit companies.  In the fiscal year 2008, 282 unpaid internships were offered through the Career Development Center at Stanford (CDC). In 2009, however, this number increased to 498 unpaid internships offered to Stanford students.

When hiring interns, for-profit companies must comply with the Fair Labor Standards Act (FSLA). FSLA has six standards that must apply to an unpaid internship or else the intern is considered an employee, thus being entitled to wages.

Unpaid internships at non-profit and government agencies are excluded because these organizations can utilize volunteer labor.

The FSLA standards include that trainees (or unpaid interns) do not displace regular employees, that employers provide training similar to “academic educational instruction” and for the “benefit of the trainees,” that the employer “derives no immediate advantage” from the trainee, and that the trainees know they are not entitled to a job or wages.

Only when these standards are met can an intern legally not be paid.  The ambiguity of the language of FSLA, however, makes it difficult to determine the legality of many unpaid internships.

Jonathan Snare, former Deputy Solicitor of Labor and now a partner in Morgan Lewis’s Labor and Employment Practice, stated, “I bet there are employers that are not aware of how this process [of FSLA standards] works.”

Unpaid internships can, however, offer excellent opportunities to college students. The CDC noted, “Students can acquire valuable experience through unpaid internships that can help them gain greater clarity about their career plans and offer them the opportunity to integrate their academic experiences in a real world setting.”

Ben Lubkin ’13, for example, shadowed the chief pediatrician orthopedic surgeon at Columbia Presbyterian Hospital and had a similar experience to what the CDC describes.  “I observed how doctors and residents interacted with patients and when the doctors were performing operations.”

Still, the federal government is concerned that not all students are receiving educational opportunities during an unpaid internship. Although clerical and secretarial work benefits a company, Snare said that it’s “not necessarily a problem.”  As long as there is a major training component of the internship, paperwork and other work is allowed as long as interns are not displacing regular employees.

Buzz Magazine in Bellaire, TX hired Amy Engler ’13 as an unpaid intern for the summer.  “I did a lot of boring work but at the same time I was learning how to write an article.  30 percent of what I did was educational, while the rest was work.”

Government organizations and career centers at universities may have a difficult time regulating unpaid internships though. In an email to the Review, the CDC stated that they do “not have the resources to check each job listing that is posted at the CDC.”

Instead, it is a student’s responsibility to report an illegal unpaid internship to the Department of Labor.

Yet in the view of many legal professionals, the connections and job experience gained through unpaid internships heavily outweigh any clerical work done for a company.

And according to Snare, “[i]nterns aren’t necessarily going to call and complain if they want to make connections.”

“The beneficiary of the arrangement is the intern,” continued Snare.

“Given the economy, you would want to get your foot in the door to get some practical experience.”

If government agencies have tighter regulations against unpaid internships, it is likely there will be fewer job opportunities available to students. Snare projected that “the adverse effect [of increased regulation] is that the losers are going to be the students.”

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