Debating the legality of internships

There’s an interesting discussion going on at Model Mayhem, a site about photography and modelling, about the legality of internships. Unpaid internships are common in this business and a quote from UnfairInternships.com got the conversation started.

Since I’m not a member of this site, I’ll address a few points here, even though many are already discussed in the FAQ and Resources sections of this blog.

If someone wants/accepts an unfair internships, it’s their own business.

This someone is putting everybody else one step behind. The fact is that this practice is endemic. People who do not want to take an internship now have to do so because they compete for an actual job against people who have internship experience. It’s a collective action problem.

An internship is a great way to learn and get into the business.

That’s very true. And so is a first job. An unfair internship is not better than a first job to learn a profession. The only reason why the former replaces the latter is competition between new entrants on the job market that lowers the bar.

Congressmen have interns.

It would not make it legal, but if they are offering unfair internships it may explain why they are not acting much against this form of labor exploitation. This being said, I am not privvy to the contracts between interns and congressmen and I don’t know what is the salary offered.

Not all internships are bad.

Also very true. This is why this website is about unfair internships. When internships are shaped like apprenticeships, they are a very good way to learn without being exploited. When they’re paid a legal wage, it’s just a job.

Is volunteering evil then?

No. The difference is generally that the organization does not derive a profit from your work.

Virtual internships – virtually real jobs

From an article in The Examiner about virtual internships:

When we interview for virtual internship positions, we are really looking for two things. First, interns need to be self-starters. Because they won’t be in our office each day, I need to know that they will be diligent with deadlines, make good use of their time and come back to me if they have the ability to take on additional projects,” said Woofter.

I wonder what makes these positions “internships”?

Unpaid internships: common but illegal

Another labor lawyer looks at unfair internships, another layer finds an illegal practice. Michael Tracy:

A common, but frequently unreported labor violation is the use of unpaid interns in violation of minimum wage and possibly overtime laws.  The scenario is fairly typical: a company offers an opportunity to ‘break into the business’ in exchange for the intern working for free.

He also provides his perspective on college credits in return for job experience:

Some companies try to get around the law by requiring that the internship be part of a college program.  However, there is no exception to the law allowed just because the “intern” may receive college credit.

He also has an interesting opinion on the lack of lawsuits:

The main reason that you do not see more lawsuits regarding unpaid internships is that the interns are very unlikely to sue.  In most cases, they fear being blacklisted, as they will undoubtedly need to use the internship as a reference to get any future work.

I would add that interns see their situation as a transition. By the time they file and win a lawsuit, they will have moved on to a proper job. They won’t benefit from their effort. But the law has provisions to address this problem, at least in California:

This is where California’s Private Attorney General Act comes in.  Because this law allows anyone at the company to sue for labor violations, even if they themselves are not affected by the violation, it is now possible for these companies to be brought into compliance with the law.  If you work for a company that uses unpaid interns and would like to put an end to this illegal practice, you should consider bringing a Private Attorney General cause of action.

So if you’re an employee that’s been displaced by an unpaid intern, you have the law on your side.

Happy to work for free

Here’s an illustration of why unfair internships thrive as potential employees are weakened. From The Daily Princetonian:

The recession is also boosting the applicant pool at FG Companies, a small boutique investment bank in New York that only offers unpaid internships, said Kai Chan GS ’04, an associate at the firm. “[The downturn] is great for guys like us, honestly, because we’re finding a lot of people who are saying, ‘Yeah, we’re happy to work for you for free,’ ” Chan said. “I noticed last year when we did interviews and said, ‘Just to be clear, this is an unpaid internship,’ some people were wavering,” Chan explained. “This year, when I explicitly start off the interview saying it’s an unpaid internship, they’re fine with that, and just say, ‘Let’s proceed.’ ”

This is the reason why unfair internships are illegal: because they are the consequence of the weak negotiation position of potential interns – exploitive, in other words. Those have no choice but to lower and lower their requirements to even gain experience. The good news is that there is a solution: collective action through legislation. And it already happened: unfair internships are illegal.

Slavery is illegal

The Examiner sets the bar the lowest when it comes to the legality of internships. How low?

HH: What characteristics of an unpaid internship make the internship illegal?

MM: An unpaid internship itself won’t be illegal unless the person has no choice but to participate—that’s slavery—or the labor or services themselves are illegal, like the sale of controlled substances without a license.

So, selling drugs and slavery make your internship illegal. Exploiters, beware !

The following clarifications from Marcia L. McCormick don’t really help, as she just says that interns are not employees nor contractors. What is the difference, we’re not told. Where it comes closest is “an internship is primarily designed to educate the intern” – and that’s a diluted version of what we read elsewhere that it should not benefit the employers.

This is also the first time that I come across an article with a legal bent that doesn’t mention the Fair Labor and Standards Act and its six criteria.

Madness and Shame

Internships-for-sale spark the outrage of Judith Timson in the Globe and Mail.

I’m no fan of unpaid internships. Not only do they penalize the less-affluent kids who can’t afford to work for free, but they are exploitive. Apparently some kids even consider taking out loans to cover the cost of working for free. This is madness. And shame on companies who encourage this to happen.

Madness and shame are words that should appear more often in articles about unfair internships.

Most said at first that buying an internship for their kid was troubling, to say the least. (I mean where does it end? Buying them a middle manager’s job at IBM when they’re 40?)

Exactly: where does it end? Isn’t the middle manager also learning something and getting a leg up for a senior management position?

Opportunity for Sale

At least one person in the mainstream media thinks that selling jobs isn’t fair game. Timothy Noah, at Slate, picked on an article from the Wall Street Journal a few weeks ago. Interesting tidbit: according to Noah, the first report on internships sales was in the Wall Street Journal in June 2006.  So, what’s the trend? Not pretty. But where Noah really puts his finger on the problem is when he points at the double moral standard applied to unfair internships and other issues of equal opportunity.

Equality of opportunity was no longer a fashionable topic, except as it pertained to race or gender (where it enjoys some legal protection) or to sexual orientation (where public attitudes are evolving toward greater tolerance). The failure of college kids who lacked means or connections to get choice internships was not new, and the formal monetization of such internships didn’t seem to shock very many people.

And this is how it gets from an entry-level salary, to a sub-legal salary, to an unpaid job, to a job that you pay for. Hey, it’s not like getting a job has ever ben easy! Now how’s that a reason not to draw a line at what’s acceptable? The line have been drawn and now it’s been crossed without anyone noticing.

Economic crisis, internships crisis

The economic crisis is becoming the angle for most of the news coverage and that about internships receives the same treatment. Even the student newspaper of the Harvard Kennedy School is worried. This blog will add a category to track its posting related to this topic.

The fact remains: unfair internships are illegal, crisis or not.

Turning to internships during the economic crisis

Some more evidence that the practice of unfair internships may worsen under the current economic crisis.

Steinfeld said the media and brokerage firms are among those using unpaid interns sometimes with the promise of future jobs.”They always had paid internships,” said Steinfeld, referring to the brokerage firms. All of a sudden, in this economy, there are big-name firms saying ‘if you want into this business, you’ll have to work for free doing cold calling,’” he said.

The practice remains illegal nevertheless.

Even after graduation, some work as unpaid “interns” in situations that violate state labor laws. State Labor Department spokesman Leo Rosales said students may only work for free if they get school credit. After graduation, the minimum $7.15 hourly wage is required.

Canada: Unfair Internships are illegal there too

The Globe and Mail, a national Canadian newspaper, has an article about unpaid internships with interesting comparisons with the United States.

While most internships in Canada have traditionally been paid, tightening budgets and hiring freezes may mean some stipends for internships may soon disappear, says Bill Weber, Toronto-based head of human resources for Drake International. It’s one step away from what is already happening in the United States, where competition for jobs is even more ferocious – so much so that some eager interns are actually forking over thousands of dollars to pay for the privilege of an internship position.

It illustrates well where the road to unfair internships leads: more unfair internships. No wonder it’s illegal.

The editor of the Toronto edition of Metro, a free newspaper (based in Sweden, of all places), tells the world that it is about to break the law.

Earlier this month, the company’s Toronto office laid off four unionized reporters and columnists, saying it will instead use paid freelancers and wire copy for content, and its unpaid interns for copy-editing functions.

A Canadian lawyer recommends to employers to sign a contract with the intern:

A clear statement that the intern is not an employee and will not receive any remuneration.

Details of the training the intern will receive, how long it will last and how it benefits the intern.

Explicitly state that the internship brings with it no possibility of an offer of employment.

What the level of supervision will be and who will provide it.

Whether the intern’s performance will be reviewed and how.

An ability for the employer to end the internship and how it would be done.

The message remains the same: interns are not free labor.