The worst economy since the Great Depression has spawned a great many things: Quantitative easing, HARP and “Keeping up with the Kardashians” to name just a few. But what else it has generated is mass unemployment among the bright-eyed crop of recent college graduates. By the latest measure, more than half of recent college grads are either unemployed or working in a job that doesn’t require a bachelor’s degree. Can you spell Starbucks or moving in with Mom and Dad? And don’t forget about those looming college loans.
Only mortgage debt now exceeds student loan debt in this nation. As of March 2012, student loan debt topped $1 trillion. That’s a 1 followed by 12 zeros — a thousand, thousand, thousand, thousand dollars.
So with the Sword of Damocles hanging over so many young folks’ necks and with more competition than a dozen mewing kittens at a six teat spigot, what has become more and more the norm is the (some would say cruel) device of unpaid internships. Working, in other words, for free in hopes that the experience will be a crowbar to pry open a door of opportunity.
Is this slavery?
Well, not exactly. No one is impressed into an internship.
But are unpaid internships legal?
On that, there is considerable debate. Within the past year and a half or so, several lawsuits have asked that very question.
The complaints generally allege that workers classified as “interns” are actually “employees” under the Fair Labor Standards Act and other state employment laws, and, as such, are entitled to be paid.
The courts have had a hard time figuring this out. In one set of cases, the court would not allow a class action to move forward, ruling that it was uncertain if the group could maintain an action for unpaid wages because it was unclear if they were employees (and, as such, were entitled to be paid). In another similar case, however, the court ruled that a group of interns could maintain a class action for unpaid wages because, presumably, their claims were at least employee-like. Interestingly, although different judges decided each case, the same legal standard was applied to both.
This, by the way, is often how the law evolves; one judge in one judicial district decides a thing one way and a different judge — often in another district — decides the seemingly same thing in another. Then the cases bounce along until the Supreme Court says, “Whoa. We need to sort this out.”
The standard that both courts applied is known as the Department of Labor’s “six-factor test.”
The six factor test says this:
There are some circumstances under which individuals who participate in “for-profit” private sector internships or training programs may do so without compensation. The determination of whether an internship or training program meets this exclusion depends upon all of the facts and circumstances of each such program.
1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
If all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the act’s minimum wage and overtime provisions do not apply to the intern.
Where the rubber meets the road is in how these six factors apply.
So what does it mean?
First, the area of law appears to be unsettled. Second, unless the intern is earning academic credit, in most circumstances, it is likely safer for an employer to pay at least the minimum wage.
By the time this all shakes out, though, the current crop will hopefully all have jobs and unpaid internships will hold a place in memory akin to disco balls, Rubik’s Cubes and Tickle Me Elmo.
Rohn K. Robbins is an attorney licensed before the bars of Colorado and California who practices in the Vail Valley with the law firm of Stevens, Littman, Biddision, Tharp and Weinberg LLC. His practice areas include business and commercial transactions, real estate and development, family law, custody, divorce and civil litigation. He may be heard on Wednesdays at 7 p.m. on KZYR radio (97.7 FM) and seen on ECOTV 18 as host of “Community Focus.” Robbins may be reached at 970-926-4461 and at either of his email addresses, firstname.lastname@example.org or email@example.com.
“The complaints generally allege that workers classified as ‘interns’ are actually ‘employees’ under the Fair Labor Standards Act and other state employment laws, and, as such, are entitled to be paid.”