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Are Unpaid Internships Legal? The Department of Labor Investigates Internships Under the Fair Labor Standards Act (“FLSA”) and State Labor Laws

Thumbnail image for above-the-bar-logo-no12.jpgThe United States Department of Labor recently released a new set of criteria to determine the legality of an unpaid internship for services to a “for-profit” private sector employers and whether interns should be paid minimum wage and overtime pursuant to the Fair Labor Standards Act and State Labor Laws. The six criteria provide a framework in which to analyze whether an internship is really a job entitling one to wages.

The first factor provides that an internship is similar to training which would be given in an academic environment. Under the second factor, the internship experience should also benefit the intern. For example, the intern should learn skills that can be used in multiple employment settings and not just that particular employer’s company. Under this factor, the intern should not be doing the routine work of the company on a regular basis such as photocopying. The third factor provides that the intern should not be replacing regular workers. If an intern does work for which the employer would otherwise have used another employee or hired someone to perform then the intern is covered under the FLSA. The last two factors focus on whether that the intern is entitled to a job at the end of the internship or entitled to wages during the internship.

Unpaid internships have skyrocketed in the past few years given the economic recession, layoffs and hiring freezes. Stanford University’s job board listed 643 unpaid internships, more than triple the number two years ago. The unemployment rate for workers ages 16 to 29 was 15.2 percent in March, as reported by the Bureau of Labor Statistics. This has been the highest for that age group since 1948. As high school and college graduates find it increasingly difficult to find jobs, many are accepting unpaid internships and performing menial work to gain experience.

Although unpaid internships can be a great way to gain experience, they can be subject to abuse by employers. In this economy, interns need to be careful of employers using them as free labor to replace regular workers. In that scenario, established employees and the interns could both lose as established employees could be laid off in favor of unpaid interns performing their jobs. Although employers may argue that the free market should determine how much interns get paid, such an idea would be great if we weren’t in a recession. Until further regulations are enacted, interns (and displaced employees) need to know their rights and be cautious about accepting internships disguised as free labor.

If any of your rights under the Fair Labor Standards Act or New York State Labor Law have been violated, the experienced New York, New Jersey and Connecticut Employment Law Attorneys at Villanueva and Sanchala can help you. Call us now at (800) 893-9645 for a free initial telephone consultation.

Web Sources:
U.S. Department of Labor, Fact Sheet #71 Politics Daily, ‘Tis the Season to Exploit College Students, 4/12/10

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