To pay, or not to pay?
Our Boston business lawyers know that is the question many businesses are asking these days with regard to student interns. It’s a question that has remained largely up to the employer, assuming that the arrangement met the standards as laid forth by the U.S. Department of Labor’s Wage and Hour Division.
A number of costly lawsuits, though, may be shifting that tide in general. The ultimate outcome is either beneficial or concerning, depending on who you ask. Those advocating for the interns in these cases say companies routinely don’t meet federal guidelines with regard to the intern-employee working relationship and instead use these young, hopeful individuals as free labor.
On the other hand, a strong argument is made that there is a great deal of value for the intern in forging work relationships and real world experience – and not every firm has the resources to pay interns.
As one form of compromise on the issue, companies are increasingly requiring that schools provide college credit for the experience, so there is little question that the student is getting a tangible benefit from the time with the firm. (Although there are some who argue in the alternative that students still have to pay for those college credits, meaning schools are essentially charging students to work.)
There are no federal statistics from the Bureau of Labor Statistics on exactly how many internships are not paid, but listings on sites like Craigslist, JournalismJobs.com and MediaBistro.com seem to indicate that such arrangements are actually the norm, perhaps more in some fields than others.
However, three recent class action lawsuits could start to change the employment environment for interns. One was against the Charlie Rose Show, in which a $250,000 settlement was reached with 189 former interns who claimed labor law violations between 2006 and 2012. Two others are pending – one against Hearst Magazines and another with Fox Searchlight Pictures.
In the Hearst case, an Ohio State University graduate claims she worked some 55 hours each week for Harper’s Bazaar with no pay and was not offered a job when the internship ended.
A similar claim has been made by a man who interned for Fox.
Companies aren’t under any obligation to hire interns after the internship period is over. However, they do need to abide by these criteria when figuring out whether the arrangement is legal:
- Even though the internship may involve actual operation of the employer’s facility, it is supposed to be similar to the training one would receive in an educational environment;
- The experience of being an intern is for the benefit of the intern – not the company;
- The work of an intern or interns is not supposed to replace that of a regular employee, but instead works closely under the supervision of the staff that already exists;
- The employer isn’t supposed to receive any immediate advantage from the work of the interns, and in fact, production may be impeded by the intern;
- Employers and interns both clearly understand the pay arrangement prior to the start of the work.
Unpaid internships can reap great benefits for everyone involved. But small businesses in particular should consult with a Boston business attorney prior to beginning an internship program — just to ensure there are no legal woes later on.