Financial Exploitation in the Workplace

The U.S. Department of Labor Rules Governing Unpaid Internships

Internships have been part and parcel to many educational programs for decades. When done well, they provide a benefit to both the intern and the company. The intern gets valuable hands-on experience in a real-life work environment, developing skills and attaining knowledge that simply can’t be found in the classroom. For potential employers, it can be an effective marketing tool, giving them exposure to the best and brightest. Unfortunately, in many instances, the internship has become little more than free labor. With legislative direction to prevent the financial exploitation of workers, the U.S. Department of Labor has established a six-part test to determine whether an unpaid internship is a violation of federal law.

The Department of Labor Rules

The Department of Labor requires that all of the following provisions be met, if an unpaid internship is to be considered legal:

  • The internship must provide some tangible benefit to the intern.
  • The employer may not derive any immediate advantage from having the intern on board. In fact, though it is not required, it is not unusual that the presence of the intern may actually interrupt or interfere with operations.
  • The program must be structured like any training that would be conducted in an educational setting. Typically, this involves clearly articulated statements of learning or educational benefits tied to specific tasks to be performed. This does not mean that the intern cannot perform work that is part of the company’s operations. It simply means that there must be a training or educational purpose for doing the work.
  • An unpaid intern may not be used in lieu of, or to perform the work of, a paid employee, but must typically work under the supervision of a paid employee
  • It must be the understanding of both parties that the intern is not entitled to any payment for time or work done
  • There can be no guarantee of a permanent position at the end of the internship

In a recent case involving two interns at Fox Searchlight Pictures, Fox argued that the test for determining the legitimacy of an unpaid internship should be based on whether the benefits to the intern outweigh the benefits to the company. The court rejected this argument, citing the DOL provision that an unpaid internship cannot provide immediate advantage to an employer.

Protect Your Rights

If you spent time as an unpaid intern, or as a trainee, provisional employee or probationary employee, but received little or no educational benefit, we can help you seek compensation as part of class action litigation. To learn more about the litigation, and find out whether you qualify for a potential claim, call us at (516)-873-9500 or (212)743-9080 (toll free at 800-585-4658), or contact us online.