Unpaid Internships: Career Opportunity or Free Labor?

In the wake of the financial crisis of 2008 and subsequent economic downturn, a pernicious employment practice has emerged which victimizes people who try to advance their careers through an internship. As unemployment increased and hiring slowed, many companies converted paid internships into unpaid internships. Unpaid internships are not new, of course, but the practice is very widespread today, even in sectors where they were previously uncommon. An unpaid internship may be a great opportunity, but in some cases the employer may be using unpaid interns in ways which violate state and federal labor laws. In today’s difficult employment environment, potential interns must take steps to protect themselves from unfair labor practices by learning the difference between a legitimate internship and an exploitative one. In some cases, legal action is necessary to reclaim wages which should have been paid.

People take unpaid internships for a number of reasons: they may feel compelled to avoid a gap on their resume, they may believe that the unpaid internship offers a possible path to full-time paid employment, or the internship may offer a uniquely valuable experience at a firm where entry-level positions are scarce. Some unpaid internships certainly benefit the interns by building their skill-sets, improving their professional networks, and serving as a launching pad for a successful career.

But less scrupulous employers may use unpaid internships to avoid hiring a paid employee. The internship may provide little or no valuable training, and the intern’s work may consist of the types of tasks that a paid employee would normally complete. The benefits of the internship are received by the employer rather than the intern. In other words, the employer is essentially stealing the intern’s time and labor without providing the type of learning experience the intern anticipated. This type of unpaid internship is likely illegal.

The United States Department of Labor released a fact sheet in April 2010 to help determine whether interns must be paid minimum wage and overtime under the Fair Labor Standards Act. The following are the markers of a legal unpaid internship:

• 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; and
• The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If the firm fails to maintain one or more of these standards, an employment relationship may exist, in which case the unpaid intern is actually entitled under the law to payment for his or her services. Other factors that may be relevant are whether the firm is a for-profit or a non-profit and whether the intern will receive college credit.

Several lawsuits by unpaid interns are working their way through the court system:

• In Xuedan Wang v. Hearst Corp., No. 12-cv-793 (S.D.N.Y.), a young woman is suing Harper’s Bazaar on behalf of all unpaid or underpaid interns who have worked at a Hearst publication since 2006. The plaintiff claims that she worked up to 55 hours per week without pay, primarily performing menial tasks for the benefit of her supervisors.
• Glatt v. Fox Searchlight Pictures, No. 11-cv-6784 (S.D.N.Y.) was filed by two plaintiffs who were unpaid for work on the “Black Swan” production. They claim that they spent most of their time doing routine tasks which did not amount to training or valuable experience.
• Bickerton v. Charles Rose, (New York State) the plaintiff worked 25 hours per week on the PBS program “Charlie Rose” without pay. She alleges that the show relied on the work of unpaid interns without providing them any training.

On the surface it may seem that there is nothing wrong with people choosing to take unpaid internships if they believe they will benefit in the long run. When internships are closer to “job shadowing” or a “sandbox experience” and expose the intern to varying aspects of the firm’s work, they are more likely to be beneficial to the intern and therefore presumptively legal. But when firms surreptitiously replace paid labor with unpaid labor, and the intern’s work is directly benefiting the firm rather than the intern, the firm is circumventing minimum wage and overtime laws. If enough employers engaged in this illegal practice, the cumulative effect would be a massive transfer of wealth from workers to business owners as well as a significant reduction in entry-level opportunities.

It is important to remember that the victims of illegal unpaid internships are not necessarily college students or recent graduates. Interns come from a wide range of backgrounds and qualifications, including people who have already established a career and are looking to try a new field. Notably, the named plaintiff in Glatt was a 40-year old man with an M.B.A. degree who had experience working at A.I.G. before trying to break into the film industry.

If you are or recently were an unpaid intern and your employer benefitted from your work and did not provide you with training or useful experience, please contact our office.

Sources:

Christine Kearney, Intern Sues TV Host Charlie Rose for Unpaid Wages (Opens new a new Window), Thomson Reuters, Mar. 14, 2012

Samuel Estreicher & Allan S. Bloom, Unpaid Internships Under Legal Scrutiny (Opens new a new Window), New York Law Journal, Jan. 4, 2013

Josh Sanburn, The Beginning of the End of the Unpaid Internship (Opens new a new Window), Time, May 2, 2012

Steven Greenhouse, Interns, Unpaid by a Studio (Opens new a new Window), File Suit, N.Y. Times, Sept. 28, 2011