With youth unemployment approaching the one million mark, getting to the first rung of the employment ladder has never been harder for Britain’s young people. As competition grows so too have the barriers, including the need to have experience of the workplace before securing a paid job.

Gone are the days when a week’s placement during the school holidays at your parent’s company could make your CV stand out. Now school leavers and even graduates are expected to have months of varied experiences to cut the mustard at interview. The problem, civil servants admit, has become endemic.

Even more interesting is Interns work – and should be paid, lawyers warn ministers:

Thousands of unpaid interns could be entitled to compensation after government legal advice emerged suggesting employers are breaking the law by not following national minimum wage rules.

It is no surprise that someone with legal background sees the travesty of unfair internships, but it is quite pleasant to see the government’s lawyers acknowledge it.

All this activity in the UK is cause for optimism. Much the way that rock and roll then rap became respectable as their fans grew older, it is possible that as more victims of unfair internships get in position of power (including writing for The Guardian), the more crackdown there will be on the practice (cue in The times they are a-changin‘).

What gave you the idea to focus on this issue?
Having worked at several unpaid internships while I was in college, the issue has been in the back of my mind for years. Also, I practice in Los Angeles, which is home to a lot of unpaid internships in what you might call “glamour” industries like entertainment, public relations and fashion. A lot of these employers are very clear about expecting interns to perform real, substantive work for no pay, but no one seems to do much about it. I saw that as an interesting niche area for my practice.

What do you bring to it?
What I hope to bring to the issue is an ability to see the issue from both sides of the table, with a focus on the realities of the workplace. For instance, I try to look not at what “opportunities” an internship might present, but at what the interns are actually doing during their workday. Oftentimes, that may be something else altogether.

Do you think that employers are generally aware that unpaid internships are often illegal?
In my experience, most employers who improperly utilize unpaid interns don’t realize that they’re violating any laws in doing so. Many employers (and interns) believe, incorrectly under U.S. and California law, that there’s no obligation to pay an intern so long as he or she receives academic credit. Some other employers believe, also incorrectly under U.S. and California law, that they can get around an obligation to pay simply by getting a signed acknowledgement from the intern that the position will be unpaid.  

Why do you think that illegal internships are so common?
I think the biggest reason, at least in the U.S., would be that there’s been no real headline-grabbing case in which an employer was hit with substantial liability because they didn’t pay their interns. As a result, there’s a lack of familiarity with the law on both sides, and many interns have no idea they might even be entitled to pay, particularly where they’re receiving academic credit.

For those interns who do believe they’ve wrongly been denied pay, there is also the fear of retaliation. Interns tend to view their internships as a door into full-time employment in their chosen field, and a lot of them believe that filing any wage claim, or even simply asking to be paid, would mean they’d be somehow blackballed from an entire industry. Personally, I think that fear is vastly overstated. 

Is it difficult for you to convince employers that their internship program may be illegal?
Rather than describing a program as “illegal,” I’d be more likely just to explain that, based on the program as it is currently structured, there is a legal obligation to pay the interns. Under both U.S. and California law, in order for an internship for a for-profit employer to be unpaid, the employer has to satisfy six specific criteria, one of which is that the employer does not receive any “immediate advantage” from the interns’ work. Frankly, it is very rare that an intern’s work would not provide such an advantage to a for-profit employer, and most employers understand this once they take a look at the decisions interpreting the law.

Do you find that the courts understand the issue?
I think that they would, but very few of these cases go all the way to trial. Instead, the vast majority of wage claims are resolved out of court, generally for amounts that are kept confidential. 

Any interesting cases that you could share?
An opinion came out in California last year [NDLR: see LACBA, July-August 2011 (PDF)] regarding an internship program organized by a non-profit group called Year-Up, Inc.. Year-Up placed interns in short-term positions with for-profit employers as part of a curriculum meant to provide the interns with technical skills.  Although the interns were not paid a minimum wage, the employers actually paid more than $22,000 per intern to Year-Up to sponsor the program. The opinion concluded that interns involved in that program did not have to be paid because each of the six factors had been satisfied, but its discussion highlights just how many hoops a California employer must jump through in order to lawfully utilize unpaid interns.  As a result, from an employer’s perspective, it will often be more efficient just to pay interns the minimum wage rather than go through the hassle of establishing an unpaid internship program that complies with the law.

As the quick advice box on the right says, this should be seen more as a website than a blog. It is not meant to follow the news, but to provide resources for interns and food for thought for employers. Use the links at the top to browse the content. And feel free to send suggestions.

“That was something [professors] stressed really hard – that we would not get paid”

Wait, there’s more, from another student:

“Humber is holding my diploma up in the air and saying we’re not giving it to you till you do this.”

At least, one law professor from York sees through it:

“My sense is that many employers believe simply calling someone an ‘intern’ relieves them of all employment obligations”.

Exactly. Ask them a simply question: why do you call it an “internship”?

The op-ed made it to the top of the most emailed articles from the New York Times and has inspired a few reactions on the web. I chose to respond to a blog post by Marc F. Bellemare, Assistant Professor of Public Policy and Economics at Duke University, where he argues that Ross Perlin’s “crusade” is misguided. You probably better have a look at his argument first if you want to understand my response.

You deserve praise for attracting some more attention to the issue raised by Ross Perlin in his op-ed, but I’m afraid that you did not make a convincing argument against his case.

You’re right to point at the group think fallacy in Ross’ (pointless) argument about the perceived political bent of US colleges. This makes it all the more disappointing that you should try to justify the practice because it dates back to the Middle Ages. Are there many other practices that you would like to justify on that basis? Following your own link, it is called a traditional wisdom fallacy.

You rightly point that new entrants on the job market contribute less and deserve a lower pay, but you overestimate the cost. The system of pay raises already takes into account the fact that a less experienced employee is likely to contribute less and hence is paid less. Are you suggesting that new entrants contribute zero to their employer? That they are paid for their experience rather than their contribution to a company? Are you suggesting that certain unions are right to put seniority ahead of performance?

Also, you would be right to suggest that it would be ridiculous to ban unpaid internships (“(…) banning unpaid internships, as Mr. Perlin suggests, is still not the way to go.”) but Ross never suggests this. He rather says that the practice has long exceeded the limits of the Fair Labor Standards Act of 1947 and that credits are a fig leaf for an exploitative practice.  Here, you commit a “straw man fallacy” by attributing him an easily refuted argument.

The problem is “unfair internships” whereby an entry-level employee goes without pay just because it is slapped with the title “intern” — regardless of its actual responsibilities, obligations and contribution. Long live the unpaid internships whereby an intern receives proper supervision and training. But this is not what Ross Perlin has witnessed and is reporting upon. In fact, he says that unpaid internships are just fine “if the college plays a central role in securing the internship and making it a substantive academic experience.” He is criticizing the rise of an unfair practice whereby employers take advantage of a weak segment of the workforce, now with the complicity of colleges.

Later, you say: “To see why, suppose we were to ban unpaid internships starting this year. Once employers have to pay for their interns, there will be a considerable drop in the number of internships are available. That is the direct effect of a ban on unpaid internships.” May that happen sooner than later. The existence of a practice and even its benefits does not justify it if the costs are greater. Should we lift speed limits, we’ll gain time and excitement at the price of safety and efficiency, so we don’t. But to revert to economics, what we have here is a collective action problem and it is the reason why it’s regulated against. The new entrants on the job market have little bargaining power, since they don’t yet belong to a collective bargaining arrangement and compete against each other, nor do they have a “signal” from the job market to prove their worth. The reason why unfair internships are already illegal (cf. FLSA, 1947) is to avoid this race to the bottom where workers are forced to give up even their pay to enter the job market, or have started to pay to work, as Ross demonstrates. When no one can do it, the playing field is leveled and no paid jobs are lost. Some may even be created as these companies would hire entry-level staff to perform those same tasks, stripped of their capacity to exploit the oversupply of labor.

Lastly, two quibbles. (1) You are right that taking an unfair internship is a form of signaling. I don’t see how it justifies it. You are descriptive, but stop short of making an argument to defend the practice. Unless you are concerned for employers who won’t be able to discern from GPA, extracurricular activities, interviews and tests which are the valuable candidates? (2) Your concern at the thought that we will create a generational rift if we enforce the ban on unfair internships (again, there is no ban on unpaid internships and Ross is not suggesting one) is very noble, but a bit thin. You correctly point to a path dependency problem. Are we stuck with this unfair and illegal practice just because we started? Is it clear that the new cohorts will lose more from missing on exploitative work experience than they would from having a fairer job market welcome them?

The “crusade” (the straw man, again!) is one for law enforcement to correct an unfair situation whereby the weak are exploited. The complicity of colleges deserves to be denounced, as Ross did.

So the lack of both money and access to networks compounds existing social and economic inequalities. Given that so many organisations in the voluntary sector work to overcome social and economic inequality and to improve the lives and opportunities of people and their communities, surely we have an obligation to ensure that internships in our sector are open to young people from all social and financial backgrounds.

Put your money where your heart is?

Volunteering:

Recently, she signed up as volunteer co-ordinator for the Dress for Success Foundation, which trains and clothes needy women looking for work. While that takes several hours a day, she also volunteers at Goodlife Fitness’ daycare, teaches at Blessed Sacrament Church and is a skating coach for the West Carleton Hockey Association.

Unfair internship:

“A lot of shows have volunteer internships, but they’re very hard to get,” says Borer, who lived with other interns in Los Angeles and was supported by his parents during his stay.

“It’s free labour for the huge corporation, but it’s also experience for me.

“I believe that it will further my résumé, absolutely. I assume it would set me apart from other 20-year-olds who have just finished the same program. It’s a very competitive industry. So if you can do volunteer work, it’s extremely beneficial.”

Very beneficial for you and detrimental to everyone else who now has to work for free to remain competitive. That’s why there’s a law to address this collective action problem.

Now, the bad news.

Molina says those numbers appear to be shrinking because “volunteering isn’t as sexy as an internship,” which is more about getting work experience than contributing to the community.

Oh dear.

At least, in those four years, we have seen seen some positive trends. In the UK, there’s a serious campaign around the parliament to ban unfair internships. In the US, the Department of Labor is finally paying attention. In Europe, outside of the UK, there’s been some talks of a European Quality Charter in Internships but other than that, not much. The mainstream media ran a few stories, if not enough by a mile.

Let’s hope that a year from now there will be more to celebrate, and four years from now, we won’t have to be here.

“There are young people working within the BBC for long periods without pay. This is not fair to them, but more importantly it excludes many others who simply don’t have the means to support themselves,” said Mr Burnham. “We look to our national broadcaster to set a better example and not take advantage of the desire of young people to work within the media. The BBC needs to show leadership and put an end to this practice immediately.”

Well said! Now that’s courageous!

Oh, wait…

He’s no longer in power.