Moreover, employers should document the terms and conditions of the unpaid internship at the outset so that student-trainee expectations line up with the program's objectives. The duration of an internship is also an important factor. Employers should be careful to limit unpaid internships to a defined period like a summer or an academic term. Employers should also issue internal guidelines and train managers to be sensitive to the legal requirements for an unpaid internship. Under the present Labor Department approach, benefit to the employer may be determinative.
To satisfy Labor Department concerns, managers should be reminded that unpaid interns will be joining their department to learn and not as much to supplement the regular work force. Narrow production work, which requires limited discretion and repetitive tasks, may be a legitimate part of the learning experience, but assignments given to unpaid interns need to be something more than just menial tasks. Managers who will interact with unpaid interns on a daily basis should think of ways to enhance the interns' experience by providing unpaid interns with general skills that are transferable to any employer in the field.
Unpaid internships can provide valuable door-opening and skill-enhancing opportunities for students and recent graduates, but such programs must be carefully designed to avoid legal pitfalls, especially in view of the increasing scrutiny of the federal and state labor departments and the emergence of a number of private collective or class action lawsuits.
Samuel Estreicher is the Dwight D. Opperman Professor of Law at New York University School of Law and of counsel to Paul Hastings. Allan S. Bloom is a partner at Paul Hastings and co-chair of the firm's employment law department in New York. Lauren B. Palais , an associate at the firm, assisted in the preparation of this article.
1. 29 U.S.C. §203(e)(1).
2. 29 U.S.C. §203(g).
3. Tony & Susan Alamo Found. v. Sec'y of Labor, 471 U.S. 290, 295 (1985).
4. Walling v. Portland Terminal Co., 330 U.S. 148, 152-53 (1947).
5. Id. at 152 (holding that the FLSA "was not intended to penalize railroads for providing, free of charge, the same kind of instruction at a place and in a manner which would most greatly benefit the trainees").
6. U.S. Department of Labor, Wage and Hour Division, "Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act" (April 2010), http://www.dol.gov/whd/regs/compliance/whdfs71.pdf.
7. Id. (emphasis added).
8. The New York State Department of Labor adds five additional criteria to the federal agency's six-factor test to determine whether interns must be paid minimum wage and overtime under New York law. See New York State Department of Labor, "Fact Sheet: Wage Requirements for Interns in For-Profit Businesses" (April 2011), http://www.labor.ny.gov/formsdocs/wp/P725.pdf.