Teamwork.jpgEmployers have for years utilized unpaid internship programs to give students and recent college graduates a chance to gain work experience.  However, since the recession began in 2008, a growing number of unpaid interns have accused their employers of exploiting them. 

There are currently several class action lawsuits working their way through the courts that seek regular and overtime pay for unpaid interns.  Two former interns sued Fox Searchlight, a film company, for failure to pay wages to unpaid interns who worked on the film “Black Swan”.  This lawsuit was recently expanded to include all unpaid interns who participated in the company’s internship program.  Hearst Corporation is also being sued by a former intern who claims she worked from 40 to 55 hours per week for Harper’s Bazaar magazine without pay.  PBS’ Charlie Rose Show recently settled a lawsuit with a group of unpaid interns for $250,000.

The unpaid interns in these lawsuits claim that their employers treated them like employees.  Consequently, the interns argue they should have been paid like employees as required by the federal Fair Labor Standards Act (“FLSA”) and state wage laws. 

While the outcome of these lawsuits remains to be seen, public employers should take this opportunity to evaluate whether their unpaid interns should be paid.  Interns are exempt from the FLSA’s minimum wage and overtime rules if the following six criteria are met:      

  1. The internship is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The agency that provides the training derives no immediate advantage from the activities of the intern; and on occasion the agency’s operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The agency and the intern understand that the intern is not entitled to wages for the time spent in the internship.

These criteria boil down to a few key concerns to keep in mind when using unpaid interns.  First, interns will likely be entitled to pay if the agency uses them as substitutes for regular workers or to supplement the existing workforce.  According to the U.S. Department of Labor (“DOL”), if the agency “would have hired additional employees or required existing staff to work additional hours had the interns not performed the work, then the interns will be viewed as employees and entitled to compensation under the FLSA.” 

Second, the internship experience should be focused on teaching interns skills that can be used in multiple employment settings.  The more an internship focuses on the agency’s actual operations and teaches skills specific to the agency, the less likely that the internship will resemble an educational environment.  For example, an internship that allows interns to learn skills by “shadowing” employees is more likely to be viewed as an educational experience as opposed to an intern who performs work that benefits the agency such as assisting customers, filing or other clerical work. 

Finally, the DOL recommends that agencies limit internships to a fixed period of time.  Many agencies allow unpaid interns to work on an indefinite basis.  This would be indicative of employment.  Consequently, agencies should inform interns of the duration of the internship at the outset.