Recently, I was watching an episode of an HBO series entitled, “Girls.” Although the series is smart, creative and funny from many perspectives, and certainly has more to do about being a 20 something and less about work, as an HR person I was suddenly getting angrily transfixed over a work issue. Basically, the main character, Hannah, who has been working as an unpaid intern in a literary agency for two years since she graduated is being exploited by her boss.
Through the support of her parents up to now, Hannah has been able to modestly live in a shared New York City rent-controlled apartment. However, her parents suddenly cut her off and tell her to go and ask her so-called employer to pay her a salary finally after two years. Unfortunately, within 30 seconds of asking her boss for a salary, he kindly points to a stack of resumes for replacing her, informs her “I’m really going to miss your energy” and wishes her luck in finding a job.
Although Hannah is a fictitious character, there are possibly hundreds of thousands of real-life Hannah’s working as unpaid interns these days. Some employment experts estimate that undergraduates work in more than one million internships a year with almost half being unpaid. In addition, a recent released report stated that about 54% of Bachelor’s degree holders under 25
last year were jobless or under-employed, the highest percentage in at least the last 11 years.
A recent New York Times article this past weekend (NYT, May 5, 2012, “Graduates Flock to Unpaid Internships) brought back to mind Hannah and her dilemma. According to the article, unpaid post-college internships have existed for decades in the film and non-profit workplaces but have more recently spread to fashion house, book and magazine publishers, marketing companies, public relations firms, art galleries, talent agencies and even law firms. Most likely, as a sign of the tough economic times, lots of companies are trying to take advantage of a situation where they need to get work done but they can’t afford it because their budgets aren’t what they used to be before the financial crash.
The NYT article goes on to describe several interns, one being an intern performing unpaid personnel work for Fox Searchlight Pictures on the film, “The Black Swan.” He’s now part of a class-action lawsuit against that company to win back pay. The article also describes unpaid interns spending long working hours performing menial task including running errands, doing coffee runs for staff and picking up people’s dry cleaning.
If you’re an employer and reading this, here’s the deal or at least the legal one. First, if you’re going to “employ” an intern to do actual work (e.g., making copies, picking up your complicated coffee order at Starbucks, making a Staples run, etc.), you can do so. However, you do need to pay them at least minimum wage. Minimum wage laws prohibit employers from hiring employees for
less than a certain hourly rate. Unpaid interns can be exempt from these rules. However, the U.S. Department of Labor makes it clear that for the intern to be exempt from minimum wage laws, he/she must get something for his or her time.
With that said, there are six “enforcement criteria” that an employer must satisfy, in order to properly classify a worker as an intern:
- The intern’s training, even though it includes actual operation of the employer’s facilities, is similar to that given in a vocational school;
- The intern’s training is for the benefit of the trainee or student;
- The intern does not displace regular employees, but rather work under their close supervision;
- The employer does not obtain or receive an immediate advantage from the intern’s activities and, on occasion, the employer’s operations may be actually impeded;
- The interns are not necessarily entitled to a job at the conclusion of the training period; and,
- The employer and the intern understand that the intern is not entitled to wages for the time spent in training.
If the criteria are not met, the intern will be considered an employee and subject to federal and state wage and hour laws including that the intern must receive compensation and the employer must deduct all applicable taxes and follow all required regulations including meal and rest breaks. From a practical stand-point, most of the unpaid internships that I have witnessed don’t even come close to meeting these requirements. Plus, this certainly doesn’t come close to meeting good corporate governance practices that everyone spends so much time talking about in their recruitment literatures.
In summary, the Labor Department has been fairly pathetic in dealing with this growing issue up to now. However, it now says that it is going after firms that fail to pay interns properly. Furthermore, it is expanding its efforts to educate companies, colleges and students on the law regarding internships.