Unpaid Internships Are Often Illegal (maybe even usually illegal)

internsMore and more businesses are attempting to have a few of their day to day or seasonal needs addressed through the use of unpaid “interns.”  These “interns” are often caught in the catch 22 of needing experience to land a paid job and needing a job to get experience.  Thus they often willingly, or at least begrudgingly, work for no pay.  Sometimes employers are under the belief that as long as the internship is part of a scholastic program involving certification of the internship, that it is perfectly proper to employ the intern without pay.  Some employers don’t even require a formal internship certification.  The reality is that if the business has unpaid interns for reasons other than altruism or an unselfish loyalty to its industry, chances are the unpaid internship is illegal.  Think about it – would our minimum wage laws be written so as to be easily circumvented by declaring a worker an “intern” or rationalizing that the worker is learning on the job?  Even many businesses find the practice of unpaid internships offensive because it is often viewed as a form of cheating to gain a competitive advantage.  So just what are the criteria for a valid unpaid internship?

Under Federal & California law, where a business is the primary beneficiary of an intern or trainee’s labors, an employment relationship exists and minimum wage laws apply.  The criteria are:

(1) the training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;

(2) the training is for the benefit of the interns;

(3) the interns do not displace regular employees, but work under close observation;

(4) the employer that provides the intern training derives no immediate advantage from the activities of the interns and on occasion his operations may actually be impeded;

(5) the interns are not necessarily entitled to a job at the completion of the training period; and,

(6) the employer and the interns understand that they are not entitled to wages for the time spent in training.

Donovan v. American Airlines, Inc. (5th Cir. 1982) 686 F2d 267, 273 fn.7

Keep in mind, that even if the employer could ultimately prevail in trial, in most cases it will be an expensive litigation leading to a monetary settlement.  Additionally, in cases where it appears that the business was deriving any benefit from the relationship, many judges and juries will not be sympathetic to the avoidance of minimum wage.

Photo by USAG-Humphreys, Flickr Creative Commons (photo used as stock image, no implication is made re status of persons in photo)

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