Federal Criteria Defining Legality of Unpaid Internships
April 12, 2010
In a recent blog, our Labor and Employment Lawyers based in Orange County, California discussed how state and federal regulators are investigating the epidemic of unpaid internships across the country, in order to stop employers from exploiting interns by violating wage and hour laws, rather than providing work exchange programs that benefit both students and employers.
According to the U.S. Labor Department's wage and hour division, for-profit employers must qualify for an unpaid internship by complying with the federal government's strict six federal legal criteria. The Department of Labor's Wage and Hour Division (WHD) clarifies the differentiation between a "trainee" and an employee in regard to the Fair Labor Standard Act (FLSA) by these six federal criteria:
- The training given in the internship must be similar to what would be given in an educational setting, or vocational school
- The training should be for the benefit of the trainee
- The trainee's work not replace workers who are regularly paid
- The employer receives no immediate advantage from the trainees' activities, and the employer's operations may actually be impeded on occasion
- At the end of the training, the trainees are not necessarily entitled to a job
- Both the trainee and the employer understand that the trainee is not entitled to wages during the training period.
In California, officials are now reportedly issuing guidance letters to advise employers on whether or not they are breaking wage and hour laws. The New York Times reports that California and other states are now requiring that the unpaid interns receive college credit as a condition of not being paid. But even federal regulators claim that college credit does not necessarily mean that interns can remain unpaid, especially when internships mainly benefit the employer, as it involves little training.
Some employers are reportedly calling for the Labor Department to update the six criteria, as they are based on a 1947 Supreme court ruling. But for now, if a for-profit company is planning to use non-paid interns, they should make sure to apply the criteria correctly, as a mis-classification could not only violate minimum wage and hour laws--it could turn a complicated web of state and federal labor and employment law violations.
On the Proliferation of Unpaid Internships: When 'Education' Becomes Exploitation, San Francisco Chronicle, April 11, 2010
The Unpaid Intern, Legal or Not, The New York Times, April 2, 2010
Watch Out: That Unpaid Intern Could Cost You, Inc., April 6, 2010
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