Interview with an employment lawyer

August 2, 2011

As evidence that law firms are starting to see the issue for what it is, Yasinski & Jones, LLP in Los Angeles, California, recently set up a website, InternshipLaw.com, to reach out to employers and interns. We hereby give the floor to John Carrigan, employment attorney with the firm, who answered our questions.

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.

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Unpaid interns: working for free

July 29, 2011

We went from lukewarm to cold on internships-for-credits, but it looks like it has gotten worse out there. Not only are colleges playing along, advertising unfair internships and making up programs with credits for internships without pay, but now they have started managing the expectations of graduates and legitimize what is an illegal and unfair practice. From the Globe and Mail, this quote from a student at Sheridan College:

“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”?

 


Unpaid Interns, Complicit Colleges

April 5, 2011

Ross Perlin wrote an op-ed in the New York Times to denounce the complicity of US colleges in encouraging the practice of unfair internships. I have few problems with the argument since it is indeed scandalous that anyone should support such an unfair practice (except Fox Business that hilariously suggests to use those parental connections!).

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.


NYT: Growth of Unpaid Internships May Be Illegal, Officials Say

April 5, 2010

The New York Times published an important article about unfair internships last week-end. Important because it takes the right perspective – they are likely illegal and unfair – and because this paper is influential (just look at some immediate coverage). Important also because the public is eager to hear about this issue, as evidenced by the 2nd position in the list of the most emailed articles today – two days after it was published – and most emailed for the business section.


So, what’s in there? Mostly, some enlightenment from the mainstream media that millions of people are being exploited in the workplace. Good for the NYT. But what’s most interesting is the section about the Labor Departments finally taking action, at the state and federal levels.

The Labor Department says it is cracking down on firms that fail to pay interns properly and expanding efforts to educate companies, colleges and students on the law regarding internships.

About time. We will cover some of these cases soon. Also, there are some interesting statistics.

In 2008, the National Association of Colleges and Employers found that 83 percent of graduating students had held internships, up from 9 percent in 1992. This means hundreds of thousands of students hold internships each year; some experts estimate that one-fourth to one-half are unpaid.

It’s really too bad that it ends with the vague “some experts”. I’m not asking for a private eye report nor an academic quote, but the NYT ought to source better its statistics.

We speak often about the role of regulators, employers and interns to end this practice, but those who publicize internships – legitimizing the postings and increasing competition among interns for a given position, among other things – also have a constructive role to play. While some listing websites take a hands-off approach, washing their hands from their role for promoting an illegal and unfair practice, but others are not so shy.

“A few famous banks have called and said, ‘We’d like to do this,’ ” Ms. Steinfeld said. “I said, ‘No way. You will not list on this campus.’ ”

Sometimes, it’s so obvious that an employer is trying to take advantage of the system, one ought to refuse the listing. Actually, any listing website should commit to apply the FLSA rules, if only to remain legal.

The story also quotes a business lawyer that pleads in favor of her clients:

Camille A. Olson, a lawyer based in Chicago who represents many employers, said: “One criterion that is hard to meet and needs updating is that the intern not perform any work to the immediate advantage of the employer. In my experience, many employers agreed to hire interns because there is very strong mutual advantage to both the worker and the employer. There should be a mutual benefit test.”

Mutually beneficial arrangements are not illegal at all, they are even encouraged. They are called “jobs” and the are usually paid a legal wage. If the intern is “beneficial” to the company,it means that they are profitable and hence they are entitled to a paycheck. This is certainly not an age-old principle that we want to overturn.


Media coverage of the NYT coverage

April 4, 2010

The New York Times had an article about unfair internships yesterday (Growth of Unpaid Internships May be Illegal, Officials Said) and suddenly the media realizes that it exists. Not that it’s all original and articulated reporting, but still, it’s a little jolt, a minute of attention for such a widespread illegal practice.

“If you’re an unpaid intern or the employer of an unpaid intern, don’t be surprised if you hear from the Labor Department soon.” Labor Department to Rescue College Kids From Illegal Unpaid Internships, New York Magazine

Let’s hope so.

“I’m alarmed about the increasing number of unpaid internships.  Unless an internship is with a nonprofit organization or qualifies for at least three college credits, all interns should be paid. ” Tough Choices: Paid, Unpaid or Purchased Internships, Chicago Blog

Not so sure about the credit solution, but well-intentioned. It’s not about being credited, it’s about being a trainee.

“Have you had an unpaid internship? Did it break the laws outlined in the article? Should the Department of Labor continue to crack down on unpaid internships and will this make finding summer work harder?” Unpaid Volunteer Interns of the World Unite?, The Daily Princetonian

I really wish the student newspapers would do more to cover this issue than link to the occasional and rare NYT article.

“Wealthy corporations and organizations take advantage of the highly competitive job market, which now resembles a pack of lions fighting over the carcass of a wildebeest, and exploit the fears and ambitions of college students and recent grads to create a slave labor situation that not only betrays the foundational spirit of internships, but may also violates labor laws.” Battle to end slave-internships more important than it seems, True/Slant

This is a nice explanation for those who think that unfair internships are “voluntary”.

“The New York Times reported Saturday Oregon, California and New York are among those states where investigations have been launched.” Business News: Unpaid internships under scrutiny, UPI.com

No new reporting other than quoting “the Times said”. Their tag line: “100 years of quality journalism”…

“One of the most despicable sides to these false no-/hypolow – pay “internships” is that the colleges and universities are colluding in it. Nay, even pushing and promoting it.” Commenter on Students Said to Be Among Victims of Boom in Unpaid Internships, The Chronicle of Higher Education.

Speaking of, shouldn’t they be covering this issue more than the NYT?

“Check out the largest (and often, smallest) radio station groups. As an executive, I was told to hire new intern(s), and use them for as long as possible. I was then told to let them go, and never offer a job, asa the position would then be filled by the next intern. Totally free labor, and more money to be enjoyed by the ownership. By the way, I didn’t comply, and had to resign to maintain a measure of dignity. This policy is probably marginally legal, but highly unethical. Another of the many problems with broadcast media across the nation.” Commenter on Crackdown on Illegal Internships, from The Daily Beast

Thank God for the commenters because the Daily Beast did nothing but quote the Times. Same thing at the Huffington Post.

Now let’s see: how long will it last? Let’s hope that this week-end coverage will not be seen as the gollden age of media coverage of unfair internships, but the beginning of a movement.

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Updated, because it’s too funny.

“Which companies have unpaid internships? Well, the NY Times, for one.” Come And Get Your Unpaid NY Times Internship, Le·gal In·sur·rec·tion

Ha !


The insidious rise in unpaid internships can run afoul of federal guidelines

March 29, 2010

Steve Duin, at The Oregonian, gets it right when he points out that the media isn’t supposed to hire staff for free. A good quote:

[Interns] don’t know that being trained for a job at their own expense has been “illegal forever,” to quote Oregon’s former labor commissioner, Jack Roberts.

Most interestingly, Steve Duin refers to successful court cases against unfair internships:

Roberts and Oregon’s Bureau of Labor and Industries could point me to only three successful wage claims for bogus internships, against Centron Solar, Design for Home and Cart De Frisco International Inc., a food-cart operation.

It is a rare occurrence, so let’s see if we can find out more details.


Unfair Internships and the media

August 8, 2009

There are a few reasons why unfair internships are still so common: internships are transitional, lawmakers offer them, and, of course, the journalism industry is full of them. Gida Hammami covered the issue at EditorsWeblog.org recently:

The journalism industry is highlighted in the report as failing to meet acceptable standards of internships, most significantly in its use of interns as a cheap replacement for full-time staff members.

No wonder it’s so rare that such a widespread illegal practice is mentioned in the media. Too bad: media outlets could ask their free interns to cover the issue !