Jeffrey A. Gruen
The Department of Labor (DOL) recently began to crack down on employer abuse of unpaid internships to the extent they violate the wage and hour laws under the Fair Labor Standards Act (FLSA). With the downturn in the economy the last few years, employers have seized the opportunity to minimize costs and increase production by hiring unpaid interns. The DOL, however, views such employer practices as an attempt to circumvent the minimum wage requirements of the FLSA.
In early April, the New York Times published an article (
see New York Times article here), that quotes M. Patricia Smith, New York’s former Labor Commissioner and a current law enforcement official for the DOL. Ms. Smith explained that, as New York Labor Commissioner, she had ordered investigation into several companies’ improper use of unpaid interns. As an extension of this practice at the DOL, she is stepping up enforcement nationwide to crackdown on the improper use of unpaid interns.
Earlier this year, the DOL released a Guidance Letter, emphasizing the six criteria that employers should consider when determining whether to classify an individual as an unpaid intern. According to this guidance, the following criteria support proper classification as an unpaid intern:
1. Whether the training is similar to what would be given in a vocational school or academic educational instruction;
2. Whether the training is for the benefit of the trainees;
3. Whether the trainees do not displace regular employees, but work under their close observation;
4. Whether the employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
5. Whether the trainees are not necessarily entitled to a job at the conclusion of the training period; and
6. Whether the employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.
Some have complained that the criteria are outdated because they originate from a 1947 U.S. Supreme Court decision, but for now, they are the only guidance available. Accordingly, employers should consult with counsel to ensure that their unpaid internship programs are being handled appropriately to avoid violating the federal and state wage and hour laws.