Recently, several courts have found unpaid internships to be illegal, as
a violation of minimum wage or fair wages laws. The decisions did not
hold that every unpaid internship is illegal, but found that some definitely
are. This has caused employers to carefully review their programs to make
sure they do not run afoul of any laws, whereas in the past, this was
less of a concern.
Unpaid internships can still be legal, but they are much more limited than
before the Supreme Court’s decision in Walling v. Portland Terminal.
To be legal now, an unpaid internship must truly be for the intern’s
benefit and not simply an opportunity to work for free. The factors that
a court will consider are (1) how much training and instruction the intern
receives, (2) whether the intern is replacing the work of other employees,
(3) whether the intern is automatically entitled to a job upon completion
of the internship, and (4) whether the internship provides for training
and experience to the detriment of the employer.
If the training and instruction is the same or less than a typical employee,
that will lead to the conclusion that the internship is not for the intern's
benefit, but is a job in disguise. Likewise, if the intern is filling
in for someone who is temporarily unable to work, that also sounds more
like a replacement worker, than an educational experience. If the intern
is guaranteed a job after the internship, the internship sounds more like
a probationary employment experience, than an educational experience (where
someone may not learn and therefore not be entitled to a job). Finally,
if the training or experience does not provide any detriment to the employer,
it will not justify the lack of compensation to the employee. In other
words, if the intern is foregoing compensation, the employer must provide
something to make the arrangement other than a free employee.
Overall, the key factor is that the internship must include valuable training
and truly be for the educational benefit for the intern, rather than simply
an opportunity to work for free in a position that already exists in an
attempt to impress the employer. These new cases will require attorneys
and employers to revise how they think about unpaid internships. Therefore,
more court decisions will likely follow as employers and attorneys try
different programs and approaches.