Most Unpaid Internships Are Unlawful

As intern came to us recently and asked if her internship, which was unpaid, complied with the wage and hour laws. It did not; she had a handsome claim for unpaid wages. Interns who do "volunteer work" or other unpaid training programs are entitled to be paid minimum wage, overtime, if applicable, and they are entitled to meal periods and rest periods, just like any other employee. When must an employer pay for the intern's work?

The answer isn't always always, but it comes close. The U.S. Department of Labor (DOL) has set a standard under the Fair Labor Standards Act (FLSA). As part of that standard, the DOL has developed six criteria for determining whether a novice worker is a paid performer or a lawfully unpaid learner or trainee:

1. The training, even though it includes actual operations of the facilities of the employers, is similar to that which would be given in a vocational school.
2. The training is for the benefit of the student.
3. The student does not displace a regular employee, but works under the close observation of a regular employee or supervisor.
4. The employer provides the training and derives no immediate advantage from the activities of the student; and on occasion, the operations may actually be impeded by the training.
5. The student is not necessarily entitled to a job at the conclusion of the training period.
6. The employer and the student understand that the student is not entitled to wages for the time spent training.

Not all six factors have to be present in order for the individual to be considered a trainee. The experience, however, should look more like a training/learning experience than a job. We find that the third and fourth factors are often lacking.

If you do work, other than pure practice, or work on dummy files, you are probably entited to get paid, and your claim can go back four years. We certainly hope you weren't an unpaid worker for four years.

It is unclear whether the 4th prong in this analysis renders traditional college internships unlawful. They are usually part of the curriculum, but participants tend to do actual work, to get a feel for the business world. Several DOL rulings, while not directly addressing the criterion, suggest that as long as the internship is a prescribed part of the curriculum, is part of the school's educational process, and is predominately for the benefit of the student, the fact that the employer receives some benefit for the student's services does not make the student an employee for purposes of wage and hour law.

A list of questions collected by R.K. Kaplan, Legal Counsel, National Association of Colleges and Employers, has been prepared to try to distinguish between a proper internship and an underpaid/unpaid trainee. A legitimate internship program should be able to answer "yes" to at least half the following questions if an unpaid internship is being contemplated:

1. Is the work that you are offering an integral part of the student's course of study?
2. Will the student receive credit for the work or is the internship required for graduation?
3. Does the student have to prepare a report of his/her experience and submit it to a faculty supervisor?
4. Have you received a letter or some other form of written documentation from the school stating that the internship is approved/sponsored by the school as educationally relevant?
5. Will the student perform work that other employees also perform, with the student doing the work for the purpose of learning and not necessarily performing a task for the employer?
6. Is the student working and providing benefit to you less than 50 percent of the time and/or is the student in a shadowing/learning mode?
7. Will you provide an opportunity for the individual to learn a skill, process, or other business function, or operate equipment?
8. Is there educational value to the work performed, that is, is it related to the courses the person is taking in school?
9. Is the individual supervised by one of your staff members?
10. Is it clear that a job is not guaranteed upon completion of the training or completion of the person's schooling?

The dollar amounts can be bigger than you think. If an employee works just four weeks as an unpaid intern, the minimum wage due would be $1,080. The aggreived intern would also be entitled to $1,620 in waiting time penalties. The intern is also entitled to recover interest and attorney's fees. If the internship lasted more than 8 hours of work per day, overtime pay was due, and interns are entitled to the same paid rest periods and unpaid meal periods as other employees. Often, the claims of a few or all of the affected employees can be brought in a single case.

If you have worked an unpaid internship in the last four years and have questions about your rights, feel free to call us at (714) 544-6609.