The Unpaid Intern is Officially Extinct in the U.S.

The Reality of Unpaid Internships

We can all agree that fresh college graduates can be more of a burden than a help.

Primarily, he or she needs to be educated in the practical aspects of trade, as universities often fail to equip students with applicable skills. Additionally, fresh graduates often lack the social skills specific to the industry, and have to be mentored and instructed before being allowed direct contact with clients. Finally, they need to be supervised, as an inexperienced worker can easily make mistakes which could damage the reputation or finances of your company.

For the reasons above interns are often not paid or are paid sub-par compensation until they prove themselves worthy of being hired as a regular employee. However, this common practice is only legal under the Fair Labor Standards Act (FLSA) if the six conditions below are met. The conditions are organized in accordance with Fact Sheet #71 published by the Department of Labor (DOL), and are underscored and commented on by me in the same order.

1. The unpaid 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;

In the DOL’s words: “in general, the more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience.”

Comment: This requirement necessitates that certain adjustments in everyday operations of the employer be made, e.g. delegating employees to give lectures to interns or organizing practical workshops.

2. The unpaid internship experience is for the benefit of the intern;

In the DOL’s words: “the more the internship provides the individual with skills that can be used in multiple employment settings, as opposed to skills particular to one employer’s operation, the more likely the intern would be viewed as receiving training”.

Comment: This prerequisite is both confusing and preposterous. Take a law firm as an example, does it mean that I am NOT supposed to teach interns the trade I am involved in, but rather some obscure areas of law, which I hardly ever practice – general skills, like accounting, taking notes or making coffee? Honestly, anything involving law would definitely be particular to my operations.

I have always believed that the goal of internship is to teach an individual particulars of one’s trade to measure his usefulness for the company, but apparently DOL sees it differently.

3. The intern does not displace regular employees, but works under close supervision of existing staff;

Comment: in order to fulfill this requirement, avoid especially (i) giving the intern the tasks of a recently fired employee, and (ii) firing employees who are performing similar tasks during the internship. Be mindful of your intern–employee ratio.

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;

In the DOL’s words: “On the other hand, if the interns are engaged in the operations of the employer or are performing productive work, then the fact that they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the FLSA’s application (…)”.

Comment: In reality every intern performs productive work. The DOL clearly imposes unrealistic expectations on U.S. employers.

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.

Comment: drafting a proper internship agreement is necessary to meet requirements 5 and 6.

Summary

The DOL’s requirements are, in my opinion, flawed. Unpaid internship was supposed to be an exchange: work for education – a simple: I teach you, you help my business.

The current framework seems to request that a certain unilateral sacrifice is made by employers to educate interns, while deriving no benefit from their work. Furthermore, the intern experience is supposed to be carefully planned to resemble academic experience, and inhibit business operations in order to avoid being classified as employment.

There are ways to structure an unpaid internship to comply with the FLSA, but I want to emphasize that the current expectations of DOL are way beyond the reasonable. Finally, an additional burden of procuring legal advice has been imposed on employers, as hiring unpaid interns demands careful planning and execution of the internship program.

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