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Alan Kotok , ,

Many Unpaid Internships On Thin Legal Ice

In Friday’s New York Times, Steven Greenhouse describes how unpaid internships may get companies offering these opportunities in legal hot water. The story tells about students not only working gratis at some of these jobs when the law says they should be paid, but also doing tasks that could hardly be called an educational experience.

Greenhouse cites evidence that the number of unpaid internships is growing, along with the eagerness of students to get their names and faces in front of potential employers. But three states — Oregon, California, and New York — have begun investigations of unpaid internships, which may violate minimum wage rules. And the U.S. Department of Labor is increasing its enforcement of internships that may break federal wage and hour laws.

The Labor Department has six criteria that must be met for companies to hire unpaid trainees:

The training must be similar to that given in an academic institution or vocational training school

The training benefits the trainees

The training cannot displace regular employees and trainees must be closely supervised

The company that provides the training gains no immediate advantage from the trainee’s activity

Trainees are not necessarily entitled to a job at the end of the training experience

Both employer and trainee understand that trainees are not entitled to compensation for the time spent in training

If any of those standards are not met, the Labor Department says, then the trainee is considered an employee under the Fair Labor Standards Act and due at least the minimum wage.

Oregon, one of the states investigating unpaid internships, found cases where unpaid interns displaced regular workers and were not working in an educational environment. Greenhouse says an investigation of unpaid internships at a solar-panel manufacturer in Oregon led to two interns receiving $3,350 in back wages.

Greenhouse also described menial work experiences of interns that come nowhere close to anyone’s definition of “educational”. In one case, a New York University (NYU) film student who hoped to get training in animation did an unpaid internship for a production company in Manhattan. However, she was assigned to the company’s facilities department and ordered to wipe off doorknobs to prevent the spread of the swine flu virus. In another case, a law firm in New York — a company that would have a problem claiming ignorance of the law — hired an NYU student for the summer, withheld the promised $10.00 an hour wage, and required the intern to make coffee and sweep out bathrooms.

The laws get fuzzy, Greenhouse says, when not-for-profit organizations offer internships. In some cases, it is difficult to tell where volunteer work for charities ends and unpaid internships begin. Another gray area involves course credits. In California and some other states, unpaid student interns can receive college credits for the experience. But the U.S. Labor Department says companies still need to meet the six criteria for unpaid internships, even if students also receive course credits.

Science students have more opportunities for landing paid internships. As we mentioned in our blog post last week on internships, many science-related student internships offer real money for the experience thanks to research grants or other training funds. And as noted earlier in March, paying interns in a well-designed internship program can pay off handsomely for employers as well.