Is Your Internship Legal?

Legal Issues Interns Should be Aware of

By John Richards, Guest Blogger, LegalMatch

In college or graduate school, choice internships are often some of the most coveted and competitive educational opportunities. If you’re in a field of study that’s going to produce thousands of graduates every year, most of whom have nearly identical credentials, every little thing you can do to set yourself apart from your peers matters, especially early in your career.

However, whether you’re aware of it or not, a huge number of legal issues swirl around the employer-intern relationship.

Most of these issues involve employment and labor law – particularly regulations concerning wages and hours. In general, if a person is hired by an employer, and does useful work for them, the employer has to pay that person at least minimum wage, and many interns do work that’s definitely useful to their employers, without collecting any direct compensation.

However, when you’re living on student loans, and are primarily concerned with building your resume and obtaining useful experience in your chosen field, presumably to give yourself an edge when you’re competing for jobs after graduation, you might not really care if your internship pays or not. And in the abstract, there’s nothing wrong with that. People make these kinds of value judgments all the time, and should be free to do so. However, what about students who simply can’t afford to do an unpaid internship?

Many students have no choice but to spend their summers working whatever paid job they can find. This is often menial work, which does nothing to boost a resume. If they have to work full time just to make ends meet, these students probably won’t have the time to do an unpaid internship on top of it, which puts less-affluent students at a significant disadvantage. After all, students with wealthy parents can get as many unpaid experience as they like, without having to worry about buying groceries or making rent.

Last year, the New York Times ran a story covering this very issue, and noted how the culture of unpaid internships might perpetuate wealth inequality, by ensuring that rich college students are able to pursue work experience far more easily than their less-wealthy classmates.

It’s pretty clear that many private, for-profit employers come extremely close to violating state and federal labor laws when it comes to hiring unpaid interns. Generally, if an intern is doing economically-useful work for the employer, that would ordinarily be done by a paid employee, they are subject to federal wage and hour laws. On the other hand, if the company receives little economic advantage from the intern, and the intern receives significant training and education from the job, it’s likely acceptable to not pay the intern.

But if you’re working at an unpaid internship, especially if it’s with an organization that’s extremely well-regarded in your chosen field, do you really care that your relationship with your employer arguably places you within the legal definition of an employee, and therefore entitles you to a wage? Probably not. And I’m all for letting consenting adults (the intern and the employer) make these types of arrangements, as long as the terms are clear from the beginning.

This doesn’t change the fact, however, that this system arguably favors the affluent, thereby perpetuating wealth inequality. Something should be done about this, but it’s very difficult to figure out exactly what. It involves a balancing act of several important, competing interests: freedom to contract, equal opportunity, and wide availability of internship positions.

For example, if we required that all internships pay at least minimum wage, this will in theory allow more people to pursue these positions, but companies will not be able to offer as many positions as they could before, which isn’t good for anybody.

On the other hand, this country tends to value equal opportunity, and there’s really no denying that a student who is just scraping by financially, and has no choice but to work at some menial job full-time during his or her summers, will be at a significant competitive disadvantage upon graduation, through no fault of his or her own.

I’ve proposed before that perhaps full-time internships should be required to pay at least minimum wage, or at least those that are at private, for-profit companies. This would allow far more students to pursue these opportunities, thereby leveling the playing field, and increasing the likelihood that the most talented and driven workers will enter their chosen field.

To ensure that internships aren’t priced into scarcity (the laws of economics apply to the labor market as much as any other market, after all), non-profit organizations should probably be exempt from the requirement that they pay their interns, or the pay requirement should be below the minimum wage, provided that interns are actually doing substantive, educational work, and not simply filling in for a paid employee.

The same rules that apply to non-profit organizations should apply to part-time internships. This would ensure that such opportunities are still widely available, and allow interns to work another part-time job to pay the bills.

There are no perfect solutions to this issue, and I don’t pretend that the solutions I’ve proposed would create a perfect system. However, I do think that they strike a pretty good balance between economic freedom, and equal opportunity.

John Richards writes on a variety of legal issues for LegalMatch.com and the LegalMatch.com Law Blog. The above material is intended for informational purposes only, and should not be construed as legal advice to assist you with your particular situation. No two factual situations are alike, and if you require legal advice, you should speak with an attorney licensed to practice in your jurisdiction.