The school year is coming to an end and a new batch of graduates will be hitting the job market, looking for their first real job. The struggling economy has little to offer, and employers are not confident enough to add personnel until the economy improves a bit. The natural temptation for both employers and job seekers is to consider summer internships. Free work, resume boost, whatever the motivation, it all sounds good. Even the internet is full of stories about famous people who worked as interns on the way to becoming who they are today. Oprah Winfrey, Lady Gaga, Brooke Shields, and Kanye West, all reportedly worked as an intern in their career. It sounds even better.

Last weekend Steven Greenhouse of the New York Times wrote, “As of Friday’s job reports showed, job growth is weak, and the unemployment rate for 20-24 year olds was 13.2 percent in April.” He mentions lawsuits filed by three different unpaid interns who worked for “Harpers Bazaar, on the movie set of “Black Swan,” and for Diane von Furstenberg’s fashion house, as well as the negative work experience of other interns who worked in Hollywood for Scott Rudin, and for a booking agent in New York. While some internships may provide valuable experience and boost a resume, others are little more than the exploitation of the vulnerable unemployed, required to perform menial tasks for free.

The Department of Labor takes a dim view of employers who seek to supplement their paid workforce, by using unpaid summer internships in this way. A DOL fact sheet offers guidance to “for-profit” private employers,” to help determine whether interns must be paid the minimum wage and overtime under the Fair Labor Standards Act, for the services they provide. Internships will most often be viewed as an employee-employer relationship, unless each element of the test described below is met. 

Internship Test:

  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.

I blogged about summer internships around this same time last year. Unfortunately, the slow economy is perpetuating the practice, as employers and college graduates continue to look to alternate ways to solve their economic problems. Minnesota Lawyer called me for a quote on an internship article they are publishing, after recognizing the same seasonal employment issue.  Employers should think again before concluding an unpaid internship is a great solution.