Is Your Unpaid Internship Legal? A Guide to Unpaid Work and FLSA Law

Interns are notoriously overworked and unpaid. Many students and recent graduates in particular fields expect they will not be paid wages for their first jobs and will instead work in unpaid internships. The New York Times noted recently that 30% of college and technical college students in the United States are working in unpaid internships this summer. These young workers expect to “pay their dues” as unpaid interns before they can land paying jobs providing livable wages. Of course, they will need to earn wages from other work to pay their living expenses during their unpaid internships.

The Law Sets Boundaries on Unpaid Internship Workers

When employers hire interns, they must be careful to fulfill the requirements of minimum wage and overtime law. The Fair Labor Standards Act requires interns to be paid wages and overtime pay if they are working “as paid employees work” and receiving no educational value from their experience.

A federal court in New York recently addressed these questions in the case of film industry interns who filed a class action lawsuit on behalf of more than 100 interns working on five films, including the movie “Black Swan.” The court found the interns were employees and entitled to wages and overtime pay. This case focused on six narrow criteria, which the federal Department of Labor has long-required employers meet to justify not paying wages to their interns. If the six criteria are met, the internship does not create an “employment relationship” governed by minimum wage and overtime law and interns are excluded from coverage under the Fair Labor Standards Act. But if the internship does meet the criteria, then the interns must be paid wages and overtime.

Six Key Criteria Essential to Unpaid Internships

Under the FLSA, unpaid internships must meet these six narrow criteria:

(1) The internship must be similar to training given in an educational environment.

(2) The experience must be for the benefit of the intern. This is a critical factor. Courts look to whether an internship was “intentionally structured” for the intern’s benefit and providing the intern academic or vocational training benefits. Incidental benefits that any other employee would receive from working in an office, like resume listings, job references, and an understanding of how an office works, are not sufficient to satisfy this criterion.

(3) The intern may not displace regular employees and must be closely supervised by the employer’s existing staff.

(4) The employer does not derive “immediate advantage” from the intern’s activities, and may even have its operations impeded.

(5) The intern is not necessarily entitled to a job at the conclusion of the internship.

(6) The employer and the intern understand the intern is not entitled to wages from the internship.

The interns in the film industry case were regularly required to do menial tasks like make coffee, take out garbage, and take and deliver lunch orders. They also performed basic administrative work, like drafting cover letters, organizing filing cabinets, making photocopies, and running errands. As a result, the court found the internships did not meet the FLSA criteria.

If you are working as an “intern” and have questions about whether you should be paid wages and overtime for your work under the FLSA, you may consult with one of our wage and hour attorneys. In Milwaukee call 414-271-8650 or in Madison call 608-257-0040 for a free wage and hour consultation.

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Michele Sumara