THERE IS NOT A REASON IN THE WORLD WHY YOU SHOULD WORK FOR FREE.
Litigation consequences of unpaid internships
Lawsuits brought by unpaid interns may reduce future internship opportunities
BY HILARY DANINHIRSCH
APRIL 14, 2014
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Working on a movie set or for a major magazine publisher may seem like a glamorous internship for a young person. But not everything is always what it appears to be on the surface.
In recent years there has been a spate of lawsuits against some large companies by former unpaid interns, citing violations of the Fair Labor Standards Act based on allegations that they were in effect, acting as employees. The first such suit was filed against Fox Searchlight Productions for interns working on the set of The Black Swan. Most recently, Conde Nast settled a class action suit brought by former interns.
"The allegation is that the work that those interns are doing qualifies as employment or work under FLSA, and they should be paid at least minimum wage and overtime," said Elizabeth Washko, Shareholder at Ogletree Deakins.
But unpaid internships have been around for years---what is really at the heart of these claims, and why now?
"I suspect it's partly due to the economy and people getting frustrated with doing these internships or repeatedly doing internships and not getting anywhere with it. Or maybe they've felt that they weren't learning anything but were doing a lot of free labor," suggested Washko. "I'm sure there have been situations where companies have abused the opportunity and haven't provided much for interns for their efforts and have used them to replace employees," she added.
Rebecca Aragon, Shareholder at Littler Mendelson, agrees. "With the economy being what it is and it's tough to get a foot in the door, internships provide invaluable experiences. But many interns find when they get there they are not receiving the kind of experience they expect, or maybe there wasn't' a meeting of minds between the company and interns as to what they'd be doing and how and what they'd be learning."
Fairness is another ingredient fueling the claims. "In some companies, internships are excellent opportunities. In other companies, interns are not learning anything, just being treated as unpaid labor, and that issue came to light as a result these class actions," added Aragon.
As of yet, there hasn't been much guidance from the courts as to what the companies should be doing to ensure that internships are legitimate, and the unpaid intern litigation trend has yet to play out fully. "We don't know how many single plaintiff actions there have been. An intern does not have to bring this kind of claim as a collective action but can do it individually," said Aragon.
As several key cases are still pending before the Second Circuit, it is hard to predict the future for unpaid internships, but to date, one result of these lawsuits is that schools with internship programs are now more closely scrutinizing where they send their students. "The last thing they want to do is give credit while all their students did was make copies and get coffee," said Aragon. "It ruins the integrity of the program and calls into question whether grades are reflective of an educational experience."
Aragon further points out that an intern who receives academic credit is not precluded from filing a claim. "It's not a shield, nor should a company feel comfortable that just because a student is coming from a very reputable school and receiving credit the company is protected from any liability. At the end of the day, the company has to make sure the internship program is for the benefit of the student."
Also, added Washko, once the courts establish the criteria more firmly, companies will be paying more attention to their internship programs, to further refine and evaluate them. However, some companies may go the way of Conde Nast, by eliminating their internship programs altogether, while Columbia University has stopped granting academic credit for internships, hoping that companies will start compensating interns in accordance with DOL guidelines.
There are several ways in which companies who wish to maintain their internship programs can protect themselves, say both Washko and Aragon. Perhaps the easiest way is to simply pay the interns minimum wage. Washko recommends that the relationship between the intern and the company be put in writing, while Aragon added she's advised companies to maintain an arbitration agreement with an intern in the event of a future claim.
Though there has been an upsurge in these types of claims recently, Aragon said she thinks that they may taper off in two or three years now that companies are more cognizant of their potential liability. "Companies will be more savvy about how to put together an internship program; they will have policies and procedures, they may have directors of internships programs, and they may pay minimum wage."
FACTS ABOUT UNPAID INTERNSHIPS AND WORKING FOR FREE!
The Unpaid Intern, Legal or Not
By STEVEN GREENHOUSE
Published: April 2, 2010
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With job openings scarce for young people, the number of unpaid internships has climbed in recent years, leading federal and state regulators to worry that more employers are illegally using such internships for free labor.
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Matthew Cavanaugh for The New York Times
Brittany Berckes, a senior at Amherst, noted that some students could not afford to work free.
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Tina Fineberg for The New York Times
Dana John, a senior at New York University, spent much of a summer internship doing clerical work for a company that books music acts.
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Convinced that many unpaid internships violate minimum wage laws, officials in Oregon, California and other states have begun investigations and fined employers. Last year, M. Patricia Smith, then New York's labor commissioner, ordered investigations into several firms' internships. Now, as the federal Labor Department's top law enforcement official, she and the wage and hour division are stepping up enforcement nationwide.
Many regulators say that violations are widespread, but that it is unusually hard to mount a major enforcement effort because interns are often afraid to file complaints. Many fear they will become known as troublemakers in their chosen field, endangering their chances with a potential future employer.
The Labor Department says it is cracking down on firms that fail to pay interns properly and expanding efforts to educate companies, colleges and students on the law regarding internships.
"If you're a for-profit employer or you want to pursue an internship with a for-profit employer, there aren't going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law," said Nancy J. Leppink, the acting director of the department's wage and hour division.
Ms. Leppink said many employers failed to pay even though their internships did not comply with the six federal legal criteria that must be satisfied for internships to be unpaid. Among those criteria are that the internship should be similar to the training given in a vocational school or academic institution, that the intern does not displace regular paid workers and that the employer "derives no immediate advantage" from the intern's activities -- in other words, it's largely a benevolent contribution to the intern.
In 2008, the National Association of Colleges and Employers found that 50 percent of graduating students had held internships, up from the 17 percent shown in a 1992 study by Northwestern University. This means hundreds of thousands of students hold internships each year; some experts estimate that one-fourth to one-half are unpaid.
In California, officials have issued guidance letters advising employers whether they are breaking the law, while Oregon regulators have unearthed numerous abuses.
"We've had cases where unpaid interns really were displacing workers and where they weren't being supervised in an educational capacity," said Bob Estabrook, spokesman for Oregon's labor department. His department recently handled complaints involving two individuals at a solar panel company who received $3,350 in back pay after claiming that they were wrongly treated as unpaid interns.
Many students said they had held internships that involved noneducational menial work. To be sure, many internships involve some unskilled work, but when the jobs are mostly drudgery, regulators say, it is clearly illegal not to pay interns.
One Ivy League student said she spent an unpaid three-month internship at a magazine packaging and shipping 20 or 40 apparel samples a day back to fashion houses that had provided them for photo shoots.
At Little Airplane, a Manhattan children's film company, an N.Y.U. student who hoped to work in animation during her unpaid internship said she was instead assigned to the facilities department and ordered to wipe the door handles each day to minimize the spread of swine flu.
Tone Thyne, a senior producer at Little Airplane, said its internships were usually highly educational and often led to good jobs.
Concerned about the effect on their future job prospects, some unpaid interns declined to give their names or to name their employers when they described their experiences in interviews.
While many colleges are accepting more moderate- and low-income students to increase economic mobility, many students and administrators complain that the growth in unpaid internships undercuts that effort by favoring well-to-do and well-connected students, speeding their climb up the career ladder.
Many less affluent students say they cannot afford to spend their summers at unpaid internships, and in any case, they often do not have an uncle or family golf buddy who can connect them to a prestigious internship.
Brittany Berckes, an Amherst senior who interned at a cable news station that she declined to identify, said her parents were not delighted that she worked a summer unpaid.
"Some of my friends can't take these internships and spend a summer without making any money because they have to help pay for their own tuition or help their families with finances," she said. "That makes them less competitive candidates for jobs after graduation."
Of course, many internships -- paid or unpaid -- serve as valuable steppingstones that help young people land future jobs. "Internships have become the gateway into the white-collar work force," said Ross Perlin, a Stanford graduate and onetime unpaid intern who is writing a book on the subject. "Employers increasingly want experience for entry-level jobs, and many students see the only way to get that is through unpaid internships."
Trudy Steinfeld, director of N.Y.U.'s Office of Career Services, said she increasingly had to ride herd on employers to make sure their unpaid internships were educational. She recently confronted a midsize law firm that promised one student an educational $10-an-hour internship. The student complained that the firm was not paying him and was requiring him to make coffee and sweep out bathrooms.
Ms. Steinfeld said some industries, most notably film, were known for unpaid internships, but she said other industries were embracing the practice, seeing its advantages.
"A few famous banks have called and said, 'We'd like to do this,' " Ms. Steinfeld said. "I said, 'No way. You will not list on this campus.' "
Dana John, an N.Y.U. senior, spent an unpaid summer at a company that books musical talent, spending much of her days photocopying, filing and responding to routine e-mail messages for her boss.
"It would have been nice to be paid, but at this point, it's so expected of me to do this for free," she said. "If you want to be in the music industry that's the way it works. If you want to get your foot in the door somehow, this is the easiest way to do it. You suck it up."
The rules for unpaid interns are less strict for non-profit groups like charities because people are allowed to do volunteer work for non-profits.
California and some other states require that interns receive college credit as a condition of being unpaid. But federal regulators say that receiving college credit does not necessarily free companies from paying interns, especially when the internship involves little training and mainly benefits the employer.
Many employers say the Labor Department's six criteria need updating because they are based on a Supreme Court decision from 1947, when many apprenticeships were for blue-collar production work.
Camille A. Olson, a lawyer based in Chicago who represents many employers, said: "One criterion that is hard to meet and needs updating is that the intern not perform any work to the immediate advantage of the employer. In my experience, many employers agreed to hire interns because there is very strong mutual advantage to both the worker and the employer. There should be a mutual benefit test."
Kathyrn Edwards, a researcher at the Economic Policy Institute and co-author of a new study on internships, told of a female intern who brought a sexual harassment complaint that was dismissed because the intern was not an employee.
"A serious problem surrounding unpaid interns is they are often not considered employees and therefore are not protected by employment discrimination laws," she said.
This article has been revised to reflect the following correction:
Correction: April 10, 2010
An article last Saturday about the increasing numbers of college students taking unpaid internships, using erroneous information from a report by the Economic Policy Institute, misstated the results of a 2008 survey by the National Association of Colleges and Employers and also the results of a Northwestern University study in 1992 . The NACE survey found that 50 percent of graduating students had participated in internships, not 83 percent. The university study found that of graduating students in 1992, 17 percent -- not 9 percent -- had held internships.
ADDITIONAL INFORMATION ON THE SUBJECT!
JOB SEEKERS..... ONCE AGAIN LISTEN UP!
TO EVEN OFFER AN UNPAID INTERNSHIP,
THE EMPLOYER MUST HAVE THE NECESSARY ACCREDITATION.
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