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Unpaid Interns under the FLSA

Thumbnail image for TAJ at Oxley's Desk.png

Tom Jacobson at Rep. Mike Oxley's desk (1987).

During my final semester at the University of North Dakota, I was lucky enough to land an internship on Capitol Hill. It was a remarkable experience.

I was assigned to work with the press secretary for Rep. Mike Oxley from Ohio (long before Sarbanes-Oxley was ever on the radar). My introduction to the office went something like this. "Hi, Tom, I'm Mike's press secretary, Sharon, and as you can see, I am pregnant. I'm going to have this baby any day now, and while I'm on maternity leave, you'll be doing my job. Enjoy your time in Washington!" The baby arrived within days, and so began my three-month stint as college student / intern turned rookie press secretary.

The stipend from the program sponsor didn't come anywhere close to covering whatever minimum wage was at the time, but the education was priceless. I attended committee meetings and did all kinds of press secretary-ish stuff. I saw President Reagan at a Rose Garden press conference, and once I shared an elevator with Iowa Rep. Fred Grandy (a/k/a "Gopher"from The Love Boat) (sorry, no photo of that!). I don't recall if my reaction was being starstruck or realizing how odd politics really are. But I digress ...

Internships are a mainstay in our educational system, for they serve the invaluable purpose of giving students real world experience that simply cannot be taught in the classroom. However, several companies, such as Fox Searchlight and Hearst Corporation, have been sued by interns who claim that their internships violated the Fair Labor Standards Act. Earlier this year, Viacom agreed to pay up to $7.2 million to settle one such class-action lawsuit brought by a group of former interns (see Viacom agrees to pay up to $7.2 million to settle intern lawsuit, LA Times March 12, 2015) . What gives?

Well, the FLSA requires that employees must be compensated for the services they perform. The Department of Labor takes the position that in the for-profit private sector, interns are usually considered to be "employees," and as such, they are entitled to minimum wage and overtime pay. However, the DOL also recognizes that if an intern fits within a very narrow exception, the FLSA does not apply. To meet this exception, all six of the following criteria must be met:

  • 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;
  • The internship experience is for the benefit of the intern;
  • The intern does not displace regular employees, but works under close supervision of existing staff;
  • 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;
  • The intern is not necessarily entitled to a job at the conclusion of the internship; and
  • The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

This test is more fully explained in DOL Fact Sheet # 71, where the DOL also notes that, "This exclusion from the definition of employment is necessarily quite narrow because the FLSA's definition of 'employ' is very broad."

As the Hearst, Fox Searchlight, Viacom and similar cases show, employers must be wary of the DOL's broad definition of "employees" who must be paid and its very narrow definition of "interns" who may be unpaid. This means that most interns will be considered employees who are entitled minimum wage, overtime pay, and the other protections of the FLSA.

For more information about this article, please contact Swenson Lervick's MSBA-Certified Labor and Employment Law Specialist, Tom Jacobson.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.
Copyright 2015 Swenson Lervick Syverson Trosvig Jacobson Schultz Cass, PA

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