Are Unpaid Internships Legal?

Many college students who are on the verge of graduation will take unpaid internships to prepare for their careers. It is usual for employers to desire prepared employees, so many universities around the country have built internship requirements into the curriculum. Recent grads accept such positions typically to gain experience and a foothold in the door, particularly in a still-struggling economy.

However, a recent wave of lawsuits over unpaid internships has targeted both large and small businesses that force companies to reevaluate its unpaid internship program, and possibly re-write its policies regarding such programs. Over the past few years, more businesses have been the targets of wage and hour lawsuits seeking back-pay and additional damages.

Do Unpaid Interns Have Wage and Hour Claims?

Unpaid interns have sued companies that include Warner Music, Fox Searchlight, Condé Nast, Viacom, and Universal Music. In many of the cases, companies have decided to settle instead of engaging in public lawsuits.

In the United States District Court Southern District of New York, former Fox Searchlight intern Eric Glatt and others sued over unpaid wages while working on the set of the movie Black Swan. Glatt v. Fox Searchlight Pictures ruled in favor of the interns, and the federal judge presiding over the case determined they were employees protected under the Fair Labor Standards Act and the New York Labor Law.

Should Business Owners Hire Unpaid Interns?

Glatt v. Searchlight Pictures has very large implications for business owners, as Judge William H. Pauley ruled in favor of the interns based on Labor Department criteria established in an earlier court case, Walling v. Portland Terminal Company.

In Walling v. Portland Terminal Company, the Supreme Court of the United States ruled in favor of a railroad company, Portland Terminal Company, which had offered an eight-day training program. This ruling created a test the Department of Labor uses to determine whether businesses can be exempt from the Fair Labor Standards Act.

For businesses to use unpaid internships, all six criteria must be met:

• Internships must be educational and for the purpose of training interns.
• Internships must be for the benefit of interns and not employers.
• Interns are not used to take the place of full-time employees, but can work under their supervision.
• Employers and interns agree the work does not guarantee wages.
• Interns are not entitled to jobs after the internship has concluded.
• Employers do not receive advantages and benefits from using unpaid interns.

Given the criteria internships must meet, it should be clear business owners using unpaid interns are running the risk of lawsuits if they do not follow these guidelines carefully. Some businesses had been using unpaid interns for mundane tasks or work that should otherwise be performed by paid staff members—commonly filing or clerical work that does not truly offer an educational benefit to the employee.

Questions About Unpaid Internships in Illinois?

Consulting with an attorney can help ensure a company is compliant with both federal and state law regarding wage and hour laws for unpaid interns. To be truly safe, a company can simply pay the intern minimum wage and follow overtime laws. However, if your business is interested in having an unpaid intern program, a business attorney in Hoffman Estates can help ensure your company is compliant to avoid future wage and hour lawsuits. Meeting the six-point criteria established by the Labor Department can be extra work and an unnecessary risk for business owners without first consulting a business attorney.