"About That Unpaid Intern... ": Court ruling helps spell out what employers can, can't do
The internship has practically become a staple of the college experience, with more than two-thirds of this year’s graduating seniors having taken part in at least one internship or co-op job during their school years, according to The National Association of Colleges and Employers.
Even as the major internship season of summer winds down, a recent glance at Internships.com, a website resource for students, employers and educators, revealed more than 1,000 openings within 50 miles of Worcester, many of them unpaid. Labor attorneys say the number of unpaid internships rose during the Great Recession as some employers saw utilizing unpaid interns as a way to cut costs. But a recent federal court ruling in New York serves as a stark reminder to for-profit businesses: There are rules you must obey so you don’t take advantage of the free help.
In June, a U.S. District Court judge ruled that Fox Searchlight Pictures Inc. and Fox Entertainment Group Inc. violated federal and state labor laws when they didn’t pay two interns who filled roles on movie sets, such as production assistants, bookkeepers, secretaries and janitors.
Central to the decision, in the first case of its kind, was a six-point guideline issued by the U.S. Department of Labor in 2010 that explained whether interns must be paid minimum wage under the Fair Labor Standards Act. All six of these criteria must be met for an unpaid internship to be legal.
• The internship must be similar to training the intern would receive in school;
• The internship experience is for the intern’s benefit;
• The intern does not displace regular employees, but works under close staff supervision;
• The employer derives no immediate advantage from the intern’s activities and occasionally its operations may be impeded;
• The intern is not necessarily entitled to a job after the internship; and
• The employer and intern understand the intern is not entitled to wages.
“This court said ... look at those six factors and you see: Did the company set up a program that’s impeding their business and are they providing an educational experience to these interns? It really should impede their business; It shouldn’t be something they’re replacing paid workers with,” said Sally Abrahamson, an associate attorney with Outten & Golden LLP, the New York law firm working on the Fox lawsuit and other, similar cases on behalf of interns.
Some may think that as long as interns are receiving college credit, they don’t need to be paid. But Amanda Baer, an attorney at Mirick O’Connell in Worcester, said requiring interns to receive college credit with the internship is only one part of the six-factor test employers should look at. That may help the argument that he or she is benefitting more from the arrangement than the employer is, or that it’s more like training than a job, but she said the four other factors in the list must also be considered.
Amy Peterson, director of marketing at Worcester’s DCU Center, said the arena and conference venue has up to six unpaid interns per semester. However, she said, department heads are very aware of the regulations about unpaid interns and make sure they follow them.
“For instance, we cannot have an intern displace any regular employee,” she said. “So it’s not as if I have somebody who called in sick today and I’ll have the intern do their job for the day. Interns are not just there for free labor.”
She said interns are also told that an internship isn’t necessarily going to lead to a job with the venue, another of the Labor Department’s rules.
She said the departments where interns may be hired to work include marketing, sales and advertising. Marketing interns may help come up with social media posts or locations within the city to place boxes where people can register to win contests. Meanwhile, interns in operations may learn how to use a CAD program to help determine how many tables and chairs can fit in a room for a specific event.
While interns learn how the DCU Center operates, they also learn how the industry as a whole operates and gain training they can take to other venues, Peterson said.
That’s important, Baer noted.
“The more the internship provides the individual with skills that can be used in multiple employment settings, as opposed to skills particular to one employer’s operation, the more likely the intern would be viewed as receiving training,” she said.
But Peterson acknowledges that even with government guidelines, managing unpaid interns can be tricky. “We’re really conscious of … making sure that the interns are involved in our business operations but they’re not in the rank of authority or business decision-making,” she said. “It is challenging to find that balance where the intern feels incorporated and part of (the business) but also doesn’t feel taken advantage of.”
Attorneys Baer and Abrahamson expect to see more similar cases now that interns have won court.
Baer suggests businesses consider the following to make sure they’re complying with the law:
• Show how the company either spent or lost money by having an intern program, such as through the cost of supervision or training, or lost profits;
• Have interns sign an agreement that they understand they aren’t entitled to a job after the internship, and that they aren’t entitled to pay;
• Be sure interns’ duties are similar to what they’re studying, and that they’re not performing menial tasks like getting coffee for employees;
• Work with the intern’s school to make sure the internship program aligns with what the student is learning; and
• Draft a description of the intern’s role and distribute it to everyone working with him or her.
“It’s definitely doable to establish a training program that comes within the internship guidelines,” Baer said. “Employers need to revisit their programs to make sure they’re correctly structured.”
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