Are unpaid internships legal?

For most for-profit companies, the answer is generally “no.”  In 2010 guidance, the Department of Labor asserted that most such interns are actually employees who should be paid wages.  Since then, unpaid interns have sued several large employers, including NBC Universal Media Inc., Viacom Inc., Sony Corp., and Donna Karan International, Inc., under the Fair Labor Standards Act (FLSA).  In these lawsuits, the interns have claimed that they were actually employees but did not receive the required minimum wages and overtime owed to them.  In a recent class action lawsuit brought by interns who worked for Saturday Night Live, NBC has offered to pay a settlement of $6.4 Million.

According to the DOL, an employer may only utilize an unpaid intern if:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Even if a business satisfies this test, it must still consider the wage and hour law of the state or states in which it is located.  These requirements may be more stringent than the FLSA.

For non-profit entities, unpaid workers may qualify as volunteers if they perform services solely for public service, religious or humanitarian objectives, and do not perform any paid work for the non-profit.  (If they do perform paid work, they can only be considered volunteers for part of their time under limited circumstances.)

As a result, companies should realize that generally workers must receive pay for services performed.  When questions arise, they should consult with skilled employment law counsel.

The above is for information purposes only and does not constitute legal advice.