Are You Getting Hosed by Your Unpaid Internship?

Good news/bad news for college grads seeking to break into the job market via the internship route. The good news: unpaid internships may be going the way of smoking in the office. The bad news: in these tough times, few employers want to fork over money for interns—so paid internships will be scarcer than feathers in a cuckoo clock.

Employers Face Serious litigation

In a landmark case, a New York federal judge recently ruled Fox Searchlight Pictures violated wage and hour laws by failing to pay two former interns for similar work done by paid employees. An article in Fox Business by Kathryn Buschman Vasel quoted Francine Breckenridge, a labor and employment attorney at law firm Strasburger: “This ruling will have a lot of employers, especially smaller businesses, rethink their internship programs if they are unpaid,” said Breckenridge. “The potential fines and bad press that comes along with a violation of labor laws might not be worth the risk.”

6 Rules by Department of Labor

If you get an unpaid internship, realize that too many employers see it as free labor. The US Department of Labor has set aside specific rules governing work, future job entitlement and pay for unpaid internships. Before you sign on, see if the unpaid internship adheres to the following rules:

• It’s designed to benefit you, the intern.
• It’s like the training you’d receive in an educational environment.
• It doesn’t displace regular employees and is closely supervised by existing staff.
• There’s no immediate employer advantage and may actually impede workflow.
• You and the employer understand you’re not entitled to wages during the internship.
• You’re not necessarily entitled to a job at the conclusion of the internship.

The last point is particularly important. If your internship becomes a trial period with the expectation that you’ll be hired on a permanent basis, you’re considered an employee under the FLSA—and should be paid!

Internships have gone “off the rails”

The new rules have employers questioning whether unpaid internships are worth the risk of litigation. That said, abuses still abound. Ross Perlin, author of Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy, notes that today’s internship system “has gone off the rails” in at least the last ten years. He cites Disneyland interns who work 12-hour shifts cleaning hotel rooms with little mentoring, training or supervision.

Bowing to parental and student pressures to get some payback for the time and expense of earning a degree, colleges have become almost too eager to find students internships—even if they’re unpaid, un-mentored, and unsupervised.

If big employers really are in the goodwill business—as many claim they are—they should embrace the concept of paid internships or, at the very least, follow FLSA guidelines for unpaid internships.

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