Rule clarifications put unpaid internships in limbo

Internships have long provided means for college students to gain job experience in exchange for working without pay – and often for college credits – but the U.S. Department of Labor’s closer scrutiny of decades-old rules may have for-profit businesses shying away from eager interns.

In April, the DOL’s Wage and Hour Division released Fact Sheet No. 71, which outlines six criteria that aim to prevent for-profit, private employers from violating the Fair Labor Standards Act when offering unpaid internships.

According to the fact sheet, these six rules must each be met, or the intern must be paid.

1. The internship, even though it includes the employer’s actual operations, is similar to training that would be given in an educational environment.

2. The internship experience is for the benefit of the intern.

3. The intern does not displace regular employees, but works under close supervision of existing staff.

4. The employer that provides the training derives no immediate advantage from the activities of the intern, and operations may be impeded occasionally.

5. The intern is not necessarily entitled to a job at the conclusion of the internship.

6. The employer and the intern agree that the intern is not entitled to wages for time spent in the internship.

A Springfield attorney who led a May 27 seminar on the rules has said it will be “pretty much impossible” for such employers to satisfy all of them.

“The six part test comes from a case that was all the way back (in) 1947, so these have been evolving and in place since the late 1940s,” said Jennifer Mueller, an employment law attorney with Baird, Lightner, Millsap & Harpool PC.  

Rule No. 4, prohibiting any immediate advantages for the employer, is perhaps most troublesome, Mueller said.

“My opinion is that any work they would be performing is going to benefit the company, menial or not,” Mueller said.

There may be some exceptions, Mueller said, as some courses of study require hands-on experience – student teaching, for example – but she noted that there’s not a clear-cut answer to whether unpaid internships are exempt from the rules just because they’re required to earn a degree.

“Especially in this economy, I think there is a larger number of employers who are trying to use the unpaid internships, and they probably can’t,” Mueller said.

Tina Moore, associate director of career planning and development at Drury University, is concerned that renewed focus on the rules will make it harder to find internships.

“We want students to experience the real world and gain that hands-on work,” Moore said. “It would be great if the students could gain a good learning experience and be paid but
unfortunately, there are some companies, particularly small businesses, that are not able to pay. It will be a challenge for students to find a good experience.”

Karen Parry, owner of Furniture Gourmet, was in talks to offer experience to an unpaid summer internship to a Drury student when she attended the seminar and switched gears.

“My intern was a management-marketing major, so I did actually create more of a lesson plan for the summer that would have her involved with all aspects of my business,” Parry said.

And just to be on the safe side, Parry applied for and received a $1,500 grant from Drury’s Edward Jones Center for Entrepreneurship and Innovation, enabling her to pay for the hours worked. According to a Drury news release, St. Louis-based Edward Jones donated $15,000 – enough for 10 internships – and funds have been awarded to students at Drury and Missouri State University.

Parry said she’s not likely to use interns again. “As a very small business, I feel like if I’m going to pay someone, I need to pay an assistant, an employee,” Parry said.

Though it might seem counterintuitive, Mueller said employers who are concerned about following the rules should contact DOL with questions.

“Their main goal is to make sure employers are complying … and not necessarily to come after you, and I don’t think a lot of people think of them as a resource in advance of any problems,” Mueller said.[[In-content Ad]]