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Unpaid Interns: Boon or Bane?
by Tad Crawford

The Fact Sheet continues by discussing issues relating to the displacement of employees and also supervision:

If an employer uses interns as substitutes for regular workers or to augment its existing workforce during specific time periods, these interns should be paid at least the minimum wage and overtime compensation for hours worked over 40 in a workweek. If the employer 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. Conversely, if the employer is providing job shadowing opportunities that allow an intern to learn certain functions under the close and constant supervision of regular employees, but the intern performs no or minimal work, the activity is more likely to be viewed as a bona fide education experience.  On the other hand, if the intern receives the same level of supervision as the employer's regular workforce, this would suggest an employment relationship, rather than training.

Finally, the Fact Sheet deals with requirement that the intern not be entitled to a job upon completion of the internship, observing, “If an intern is placed with the employer for a trial period with the expectation that he or she will then be hired on a permanent basis, that individual generally would be considered an employee under the FLSA.”

Taken together, the explanations and examples given in the Fact Sheet make clear that the exemption for unpaid interns is a narrow one. The intern must receive a training experience with special supervision and not merely do the duties of an employee. The less actual work the employee performs the more likely the unpaid internship will be legal. Not only must the intern not do the work of an employee, but the internship must not be based on a promise of employment. The guidelines as elaborated by the Fact Sheet make clear that the unpaid intern is there for his or her own educational benefit and not to do free work for the company.

Of course, the legal guidelines reflect a point of view about what is right and wrong. Should the guidelines be amended or do they reflect a balancing of the moral issues involved when someone in a work environment is not paid?

I accept the premise of the Fair Labor Standards Act that employees should be paid for working. In this context the minimum wage is a guarantee of compensation. None of the arguments in favor of unpaid internships overcome this basic right of those who are, in fact, employees. It is true that many interns are eager to take positions that are unpaid. But this is because a pernicious system has been created in which unpaid internships represent one of the entrees into desired professional fields. Ask a simple question: Would these interns be more or less eager if these internships were paid rather than unpaid?

Of course, an unpaid internship can be a valuable credential on a résumé. But a paid internship would be as good a credential, if not better. If the intern is fortunate enough to find paying employment after the internship, the fact that the internship was paid puts the intern in a stronger position to negotiate over wages.

An internship can also be a wonderful experience in which skills are learned, confidence gained and a step is taken toward a desired career. But, again, this is as true of a paid internship as an unpaid internship.

That federal and state laws discourage companies from using unpaid interns is hardly an argument for doing away with these laws. They are designed to make sure that employees are paid. The exceptions with respect to who is an employee are narrow and rightfully so. If companies fear that having interns may violate the legal guidelines, why not simply pay the minimum wage to the interns?

A company that is truly teaching an intern and not having the intern do the work of an employee has a legitimate objection to paying for the internship. This objection has been codified in the law and such an intern does not have
to be paid.

Moreover, there is a danger in accepting the concept that some employees can work without pay. While most internships are sought by students or recent graduates, there is nothing to stop companies from requiring unpaid labor from any and all employees if the federal and state protections for employees are ignored. Companies that use unpaid labor are not on a level playing field with their competitors, and there is no reason why the unscrupulous should benefit at the expense of those who are fair. Protections for employees, including the minimum wage, have been enacted for good reason and employers in all fields, and especially attractive fields such as those involving art and communications, should observe the legal guidelines and do what is right. CA Crawford
Tad Crawford, the Legal/Business Affairs editor for Communication Arts, is the publisher for Allworth Press, and author of Legal Guide for the Visual Artist, the Business and Legal Forms series for creative professionals, The Secret Life of Money and his most recent book, The Money Mentor: A Tale of Finding Financial Freedom (Allworth Press).