Officials Crack Down On Unpaid Internships

April 12, 2010

peanutsLabor officials are beginning to focus attention on the proliferation of unpaid internships, which they say illegally takes advantage of young people who agree to work for free.

Many companies are increasing the hiring of unpaid interns to trim labor costs during difficult economic times. The San Francisco Chronicle reports that at Stanford University, for example, 643 unpaid internships were available this year--more than triple the number that was posted two years ago. But some of these positions violate federal workplace laws by displacing regular paid employees and failing to provide sufficient educational benefits.

"If you're a for-profit employer or you want to pursue an internship with a for-profit employer, there aren't going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law," noted Nancy J. Leppink, a Labor Department official, in The New York Times this month.

Leppink explained to the Times that six federal legal criteria need to be satisfied for internships to be unpaid. Internships must be similar to training offered in a school or academic institution, for example, and cannot displace paid employees. According to the criteria, employers also may not derive any "immediate advantage" from the intern's work.

"We've had cases where unpaid interns really were displacing workers and where they weren't being supervised in an educational capacity," said Bob Estabrook, spokesman for Oregon's labor department, who was quoted in the Times.

The Christian Science Monitor points out that unpaid internships also unfairly "privilege the privileged," giving only those with substantial savings the opportunity to advance professionally. "So rather than act as a leveler," wrote Danielle Connor, a former intern who now co-directs a creative communications group, "this great recession may end up providing a further boost to the prep-school crowd."

But a more recent article in The New York Times offers a hint of the uphill battle that unpaid interns face: The Times reports that the California Division of Labors Standards Enforcement recently issued new guidelines about compensation for internships which stipulated that interns need not always be paid when doing the same work as regular employees. According to David Balter, acting chief counsel for the agency, an intern would not need to be paid if the employer provides close supervision and lays out money for training.

The guidelines specifically addressed a program in San Francisco called Year Up, which arranges unpaid internships in information technology for 18- to 24-year-olds in low-income areas. Interns receive college credit, and companies contribute about $875 per week for each intern which primarily goes to Year Up.

Although companies clearly received some benefits by hiring the interns, the agency concluded that the lack of compensation was fair. "The substantial structured supervision and informal observation of interns by other workers thus offsets any perceived advantage the businesses receive in the activities performed by the program's interns," noted the guidelines, which were quoted in the Times.

Compiled by Yaffa Klugerman


"California Labor Dept. Revises Guidelines on When Interns Must Be Paid," The New York Times, April 9, 2010, Steven Greenhouse

"On the Proliferation of Unpaid Internships: When 'Education' Becomes Exploitation," San Francisco Chronicle, April 11, 2010

"The Real Intern Scandal: Working Without Pay Privileges the Privileged," Christian Science Monitor, April 8, 2010, Danielle Connor

"The Unpaid Intern, Legal or Not,"The New York Times, April 2, 2010, Steven Greenhouse

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