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Free Labor In Disguise?: Navigating Student Internships


 

Michael P. Maslanka

Assistant Professor of Law, UNT Dallas College of Law


SPRING 2022 ISSUE:

TEEN ISSUES

 

Forward planning high school and college students are continually seeking building blocks for their resumes, job and higher education applications, and overall skill set enhancement. Enter the internship.


The National Association of Colleges and Employers (NACA) reports from 2014 to 2018, between 53% and 60% of college seniors completed an internship during their four years at college. NACA also reports that a whopping 92% of employers have some type of formal internship program. But there is a catch: NACA states that a mere 60% of these programs are paid internships. One study as of 2011 also indicates that 75% of the 9,500,000 college/university students undertake at least one internship during their college/university tenure, with a substantial number being unpaid.¹


Yes, that’s right, the result is that the programs require work from students without any payment to them other than the experience gained, the resume enhanced, and the networking accomplished. To be sure, these advantages are very real, as a recent research paper confirms: “[internships provide] students with valuable professional experience and networks, giving employers a steady stream of new talent with fresh ideas from academia; internships enable educators to create venues for students to translate academic knowledge to real-world situations.”²

But isn’t work without pay, like taxation without representation, against the law? Yes, but not always. Courts decide legality by asking one question: who is the primary beneficiary of the work being performed—the employer or the intern? If it is the employer, then the failure to pay minimum wage and overtime violates the Fair Labor Standards Act (FLSA); if it is the employee, there is no legally mandated wage obligation.


The dictionary definition of primary is “of chief importance; principal.” So far, so good. What factors go into deciding “principal” in this legal context? A leading case³ sets them out for us. This article provides some commentary after each as to why the element is being considered by the court.⁴


Factor No. 1: The extent to which the intern and the employer clearly understand that there is no expectation of compensation.


Any promise of compensation, express or implied, suggests that the intern is an employee who should be paid. Translation: It is more likely that the student is an employee deserving of wages if the student is being treated as an employee. Here, the setting of wages is an indicator of true employee status (that is, how an actual employee is treated) and further suggests that the employer knows that it will be asking the students to perform tasks warranting a wage. Moreover, understand that this factor is less important because the unequal bargaining power of students and the employer makes such an “understanding” and its “consent” of questionable persuasive value in the overall analysis.


Factor No. 2: The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and hands-on training provided by educational institutions.


Translation: The goal is for the student to learn but merely in a different environment (real world) than in the more artificial one of the classrooms. Note, however, that this factor does not preclude the assignment of routine tasks such as making copies or taking notes at a meeting. The value of an internship can also be found in simply being present at a workplace in which the students will absorb the vibe of the type of place where they aspire to someday be employed. And, finally, note that, in all of these elements, the phrase “the extent” means that the factors are not all or nothing propositions.


Factor No. 3: The extent to which the internship is tied to the intern’s formal education program by integrated coursework or by the receipt of academic credit.


Translation: This factor cuts in favor of non-employee status. Why? Because there is a third party at the table, ensuring that time is devoted to education, which benefits the student rather than the employer.


Factor No. 4: The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.


Translation: This factor shows that the employer understands that its needs come in second to the student’s. Thus, an employer cannot insist that the students work during Fall or Spring break or at other times when school is not in session.


Factor No. 5: The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.

Translation: A student learns something once, and repeats the task a second time in order to solidify the knowledge gained. But if the task is performed multiple times, over a period of time, that implies that the student is really functioning as an employee to the benefit of the employer.


Factor No. 6: The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.


Translation: While the cases say that all seven factors are equally important and should be considered as a whole, it is hard to dispute that this is the most important factor. An intern who replaces a regular worker is essentially doing that person’s work and doing it for free. Permitting an internship to be used in this fashion almost entirely benefits the employer and is of little benefit to the students who are now laboring in both school and at a regular job.


Factor No. 7: The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.


Translation: This factor seeks to prohibit an employer from trying to incentivize the student to work for free, performing tasks normally performed by a regular worker by dangling out the hope of a paid, full-time job at the conclusion of the internship. This is antithetical to the spirit of an internship being for educational purposes.

One twist on the internship scenario is when a student pays tuition to a trade school, such as one teaching cosmetology, and the education includes the requirement that the student perform work on paying customers, through tasks such as styling their hair or applying their makeup. Courts reason that the hands-on training that the students receive make them the primary beneficiaries of the relationship. This is especially so, given that the hours worked can count toward hours required to become licensed by the state as a cosmetologist.


What should a student do if unsure of whether they are being offered a true internship or a job in the guise of an unpaid internship? Now that the student knows the factors considered in distinguishing between the two, the student or their advisor(s) can ask the right questions to see if the offer is a sincere offer of a true internship or an insincere offer of free work with only some or no benefit to the student. If the student finds herself or himself in the second scenario, the student can always go to the United States Department of Labor’s Wage and Hour Division to file a complaint. Regional offices are located in major cities such as Dallas.


A final point. The most valuable asset each of us possesses is our time. We get just so much of it. So be sure to insist upon your legal rights, be sure to understand what those rights are, but—most importantly—be sure not to squander your time on fake internships. They are just not worth it.

 

¹ National Association of Colleges and Employers, https://www.naceweb.org/ (last visited November 29, 2022). ² Matthew T. Hora et al., Problematizing College Internships: Exploring Issues with Access, Program Design, and Developmental Outcomes in Three U.S. Colleges (Wisconsin Center for Education Research 2019); See also James J. Brudney, Square Pegs and Round Holes: Shrinking Protections For Unpaid Interns under the Fair Labor Standards Act, in Internships, Employability and the Search for Decent Work Experience 163 (Andrew Stewart, et al. eds., 2021). ³ Glatt et al v. Fox Searchlight Pictures, Inc., 811 F.3d 528 (3d Cir. 2015).Nick Martiniano, Intern’s Lament: Distinguishing an Employee and an Intern Under the Fair Labor Standards Act 126 Penn. St. L. Rev. 307 (2021).

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