Consider This a Warning: Unpaid Interns

Thomas Warns*

Unpaid internships have come under fire recently, as a swell of class action lawsuits have been filed in the last year against companies that use unpaid interns, even whilst the number of unpaid interns reaches close to 2 million people per year. This past week Linda Federica-O’Murchu wrote an article for NBC News articulating the views of defenders and critics of the unpaid internship. While you should read the informative article here, below is a snapshot of the two competing schools of thought:

It's easy to see why unpaid interns are replacing salaried employees at some companies. Employers know they can fill vacant positions with a virtually unlimited supply of bright, hard-working young helpers, and at the same time try them out risk-free for future paid positions. Many interns said they benefit from the arrangement as well, by obtaining valuable on-the-job training and greater employability…

"Interns say, 'I'm just doing this to get my foot in the door of this industry.' But it's not that simple," Glatt said. "We had an unpaid intern picking up performers and driving them to and from rehearsals. Teamsters handle transportation on films. When they found out what was happening, they rightfully reclaimed that job. 

"The interns that are taking out the garbage and sweeping the floor—that's somebody's union job."

Are unpaid internships a valuable part of a young professional’s career or is it just an opportunistic attempt by companies to save money at the expense of full-time employees? Should they be legal at all?

Perhaps complicating the conundrum is the majestic simplicity of the arguments for both sides. On the one side, it seems obvious that people should be paid for their work. Equally obvious is the fact that unpaid internships are voluntary associations, and that workers can gain benefits from employment besides a paycheck. If companies were forced to pay interns the minimum wage, many might opt to do without their help altogether. What is a policymaker to do?

One solution would be to get the government out of the way. As this Forbes article points out, the legal battle to get interns paid centers around the Fair Labor Standards Act of 1938, and the Labor Department’s regulations that followed it. The Labor Department has a six-part test to determine whether an intern should be paid; among the six prongs are requirements that the job has to be “for the benefit of the intern,” the intern doesn’t displace paid workers and the employer “derives no immediate advantage” from the intern’s activities. This amorphous standard basically says that the internship must be for the benefit of the student, not the employer. This is interesting, since most private contracts/business arrangements are entered into on the premise of mutual value. Companies aren’t expected to teach raw college graduates important job skills with no expected benefit, are they?

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Regulations Threaten Mutual Benefit

It may be helpful to glance briefly at what the author did this summer. The author was one of about ten interns in the Major Offense Bureau at the Nassau County District Attorney’s Office (the numbers fluctuated throughout the summer). The County provided no remuneration for interns, although the author received funding from his law school, as did some interns from other law schools; some merely received credits. The first week or so, we had few opportunities to do substantive work, mostly digesting lectures on different crimes which the office prosecuted and observing a variety of motions and hearings. There was also dreaded photocopying. At this stage, our value to Nassau County was probably close to $0 per hour.

By week ten however, the situation had palpably changed. Many of us were gaining valuable experience writing motions and memos to be submitted to the court, or researching a variety of legal topics for Assistant District Attorneys. Some even accompanied ADAs to hearings in order to research cases cited in opposing counsels’ arguments and help form a response. Our value certainly exceeded $0 per hour, but no one thought we were being taken advantage of; the benefits of an automatic second-round interview for a full-time job, building our resumes, and having built important connections with superiors in the office were valuable rewards.

But would the Department of Labor condemn this mutually beneficial arrangement? Is it clear that our employer discerned “no immediate advantage” from our activities? After all, every hour we spent writing a brief or doing research saved a similar amount of time for ADAs to work on different, potentially more important matters. Did the amount of work we performed take away a job from a paralegal or other member of the office’s support staff?   

If the County were forced to pay us the minimum wage because of the Labor Department regulations, we likely would have been on the street with no internship and no paycheck in a heartbeat. It was no secret walking through the shabby courthouse that Nassau County has budget woes, and that intern pay would not be a priority. This would have been a disservice to both sides caused by the regulators trying to help us get paid at least minimum wage.


The Minimum Wage and Volunteerism

One pervasive criticism of unpaid internships is that they favor middle and upper class interns who can lean on their family’s wealth while they are not being paid, at the expense of those without such an advantage. But what if the minimum wage law didn’t exist and Nassau County (or other businesses, firms, etc.) could only afford to offer $3 or $4 an hour, enough say for gas to go to and from the internship and buy groceries? This would help bridge the resource gap among interns to an extent, and allow interns more choice in balancing where to work with a wider variety of paid employment. Where employers once cried that they couldn’t afford to pay interns at all, they may suddenly find themselves bidding higher (though potentially still below minimum wage) to secure students from better schools or with more work experience.

What about the union boss who whines about hungry interns taking away union jobs sweeping floors and taking out the garbage? The complaint is ironic, since many unions rely on apprenticeships (a.k.a. unpaid interns) to train new workers, and indeed their jobs wouldn’t be in jeopardy if they didn’t push wages for unskilled labor so high. While it is possible that allowing the interns to usurp these “union jobs” like taking out the garbage and cleaning up on the set of the Black Swan may have been a violation of a contractual agreement between labor unions and Fox Searchlight, it seems unlikely a wily intern had nothing to gain by having such close contact with figures inside the movie industry for an extended period of time.  If the internship was not worth their time and effort, they were always free to quit thanks to the 13th Amendment. Like many other companies, if forced to pay the minimum wage to interns Fox Searchlight might decline to hire interns at all, robbing many young professionals of a chance to gain some exposure to the industry.

If we are so concerned by unpaid internships, should we ban volunteerism as well? Indeed consider the perversity that our minimum wage law creates right now. A boy scout can work to sell baked goods outside a Walmart and raise $4 per hour to finance his Little League baseball team, but if the store manager invited him to come inside and bag groceries for $6 per hour towards the Little League team, he would be vilified as a law-breaker and robber baron – two voluntary transactions, two wildly divergent outcomes. Common sense prevents bureaucrats from banning volunteer activity, but unfortunately common sense is not enough to knife through every set of unhelpful regulations.

 *Thomas Warns is a J.D. Candidate, class of 2015, at NYU School of law, Staff Editor on the NYU Journal of Law & Liberty , and author of the weekly column "Consider This a Warning."