A debate about unfair internships

February 5, 2012

The New York Times is hosting a debate about unpaid internships (side note: I really wish having been more successful at promoting the use of “unfair internships”). So far, five people have shared their opinion, four against and one in favor. There is Ross Perlin, well-known as the author of Intern Nation, who describes the recent evolution (degradation) of internships. There is Alex Footman, who is suing Fox Searchlight for his own experience as an unpaid intern and who’s making the argument that enforcing the law is he government’s job, not his (agreed). Then, an employment attorney makes the simple point, argued here too that internships are “a valuable idea, if we follow the law”. Raphael Pope-Sussman makes the case that unions should take up the fight to enforce the law and restrict unfair internships (in the UK, the Trade Union Congress does it).

This is all good and thoughtful, but let’s look at the dissenter’s argument. David Law, founder of Above the Law (I’m not joking) makes this interesting argument:

But unpaid internships are more a symptom than a cause of economic weakness. They are so popular right now because many employers, large and small, simply don’t have the ability to create new, full-time, paid positions.

Oh, that’s what it is! The employers really, really want to pay their junior staff, they just can’t afford it! Oh well then. They should pass on the idea to all companies that are going bankrupt: stop paying your staff if you can’t afford it, it’s no big deal. David Law then caps it off with this gem:

In the end, the status quo, while imperfect and inconsistent, may not be that bad.

What he apparently does not realize is that there is no status quo: the situation is getting worse, as Ross Perlin demonstrates. Who, 20 years ago, needed to go through some 5 internships before getting a paid position?

It’s good that the New York Times take up this issue and it’s even better to see that it is so hard to find a good defense of unfair internships.


Internships: The Scandal of Britain’s Unpaid Army

November 15, 2011

The Guardian has two excellent articles on the scandal (their word) of unfair internships. Internships: the scandal of Britain’s unpaid army makes the point that internships are not an option.

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‘).


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.


Intern laws tough to navigate?

July 21, 2010

Another lawyer looks at internships. You know what’s coming:

Probably the most important lesson to be taken away is that the temptation to have an intern open or deliver the mail, help with the filing, answer the telephones or run menial errands should be accompanied with a paycheck.

Duh.


European Quality Charter on Internships – An Update

July 19, 2010

The last and only time we mentioned the European Quality Charter on Internships was in December… 2007. It was promised for 2008. Not surprisingly perhaps, it is still nowhere to be seen, but a symbolic milestone was crossed this month when members of the European Parliament (a deliberative body with mild powers but the weight of democratic legitimacy for the European Union) reminded the Council (executive branch) and Commission (executive branch too!) of their promise. This should put to rest the idea that it is an Anglo-American problem:

“Traineeships are part of education and must not replace real jobs,” insisted Turunen, stressing that it was high time for the Commission to act.

The idea of a charter was triggered by youth organisations, which see a worrying trend developing in the midst of the crisis, whereby employers are hiring trainees to reduce costs.

The practice of recruiting interns instead of employees, without labour law protection and often with no or very limited financial compensation, limits young people’s chances of being fully integrated into society, said YFJ Secretary-General Giuseppe Porcaro.

“Especially in times of crisis, the lack of legal requirements or clear quality guidelines and educational schemes may lead to exploitation and precariousness that is undermining the main aim of the internships: to be an educational experience,” Porcaro added.

Even the original resolution describes the problem:

C.   whereas employers seem to be using traineeships and internships more frequently to replace regular employment, thereby exploiting the obstacles to entering the labour market faced by young people; whereas such forms of exploitation of young people need to be addressed and effectively eradicated by Member States

And here’s what the MEPs are asking:

21.  Calls for better and secured internships; calls on the Commission and the Council, following the commitment given in Communication COM(2007)0498 “to propose an initiative for a European quality charter on internships”, to set up a European Quality Charter on Internships setting out minimum standards for internships to ensure their educational value and avoid exploitation, taking into account that internships form part of education and must not replace actual jobs. These minimum standards should include an outline of the job description or qualifications to be acquired, a time limit on internships, a minimum allowance based on standard-of-living costs in the place where the internship is performed that comply with national traditions, insurance in the area of their work, social security benefits in line with local standards and a clear connection to the educational programme in question;

Most interestingly, they also ask the Commission to track statistics on internships. That’d be nice.

See you in two years and a half for another walk in the courtyard, European Charter!


A milestone: Fact Sheet #71

April 22, 2010

The US Department of Labor issued the Fact Sheet #71 this week: Internship Programs under the Fair Labor Standards Act. So what does it say? Same old, same old:


The following six criteria must be applied when making this determination:

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.

This fact sheet says nothing new. It is just a reminder of the law – a fact sheet, not a new legislation. Still, it is a milestone. This blog was started almost four years ago because there were no other resources on the web covering this issue. The law existed but what apparently ignored. Since then, many blogs and websites have been started, there’s been interesting movement in the UK and the mainstream media has started to take an interest in the issue. And now, State governments are cracking down on these scams. So this fact sheet from the federal government is a major shift in that it shows that the authorities are finally paying attention to a scandal hidden in plain sight for too long already. We can only hope that the effort will be sustained and will lead to a real change. Those who are annoyed by this blog may even start hoping that it will be suspended as it becomes useless.

There’s something interesting in the fine prints, at the end of the fact sheet:

The FLSA makes a special exception under certain circumstances for individuals who volunteer to perform services for a state or local government agency and for individuals who volunteer for humanitarian purposes for private non-profit food banks. WHD also recognizes an exception for individuals who volunteer their time, freely and without anticipation of compensation for religious, charitable, civic, or humanitarian purposes to non-profit organizations.  Unpaid internships in the public sector and for non-profit charitable organizations, where the intern volunteers without expectation of compensation, are generally permissible. WHD is reviewing the need for additional guidance on internships in the public and non-profit sectors.

I’ve never cared much for this exception for the public sector. I think that politicians and the government should lead by example and carving themselves an exception is no way to gain credibility in enforcing this law. I don’t yet see the rationale. Because the government is not-for-profit? Anyway, if someone knows, please share in the comments.

What’s interesting is that last sentence: they are reviewing the need for additional guidance. Could it be that the spirit of this exception will finally be explained?


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.