The Fate of Unpaid Internships

Most people my age have done at least one, if not many, unpaid internships. But whether future generations of recent college graduates will be able to say the same is up for debate, as Melissa Schorr’s recent Boston Globe article illustrates:

In what activists envision as a nascent social movement — and some bosses see as ungrateful whippersnappers unwilling to pay their dues — a slew of unpaid interns have filed suit against their former employers, including high-profile companies such as Fox Searchlight Pictures, Hearst Magazines, Gawker Media, NBCUniversal, Sony, and Conde Nast, claiming they were, in fact, employees under federal labor laws and demanding back pay. Some of the cases are still in progress or the sides have settled, and in a few instances the interns have lost. But in June came a federal district judge’s decision that got everyone’s attention: He ruled in favor of two interns who had worked on the set of the Fox Searchlight film Black Swan. That decision has set employers here and nationwide scrambling to reevaluate the legality of their own internships.

In fairness to employers (and as Schorr’s article notes), part of the law as written (which applies to internships at for-profit entities; government and non-profit unpaid internships are generally in the clear) is a bit bizarre, namely criteria #4:

The determination of whether an internship or training program meets this exclusion depends upon all of the facts and circumstances of each such program. The following six criteria must be applied when making this determination:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to
training which 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 on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the
internship.

If all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the Act’s minimum wage and overtime provisions do not apply to the intern.

It appears odd to require that, for an internship to qualify as unpaid, the employer must obtain, “no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded.” There can’t be too many for-profit entities out there which are willing to let interns run around and either muck things up or at best do nothing obviously productive just because of a deep commitment to general professional development. But criteria #4 does exist, and it seems pretty undeniable that, given its existence, many unpaid internships are clear violations of the FLSA (Fair Labor Standards Act).*

How will employers respond? Will they, unwilling to run the risk of class-action lawsuits from unpaid interns, keep their internship programs and add a salary? Will they carry on as they have, and simply knock on wood? Will they reconfigure internship programs to ensure closer compliance with the Fair Labor Standards Act? Or will they simply ax the programs entirely, as Conde Nast has done? Likely employers will do all of those. But of course that doesn’t answer the question of whether they should have to do anything in the first place; of whether or not unpaid internships as currently practiced at for-profit institutions should exist in the first place.

The present-day internship is embedded in a complex tangle of professional labor relations, socio-economic status, and levels of academic achievement.** As a result, there are no clear and satisfying answers to the question, “should unpaid internships at for-profit institutions exist?” And so I strongly suspect most answers to it reveal more about the person’s priors than anything else.***

On the face of it, it seems strange that this is even a debate – there’s a federal minimum wage law, and if you’re going to do a job for a company (the food service industry notwithstanding), you’re entitled to earn at least that. It’s not clear why employers should be able to get around that requirement simply by calling something an internship instead of a 3-month long job opportunity. On the other hand, let’s say you go to NYU, and instead of taking an additional class, you get equivalent credit spending x hours per week answering phones and editing emails for a fashion magazine. That doesn’t seem unreasonable; you’re going to be in the city regardless, so why not get some practical experience that doubles as academic credit? Then again, if the magazine in question knows it can rely on a steady flow of interns to execute those basic functions, perhaps it hires a few fewer administrative assistants, thus killing just the sort of jobs those interns might have expected to get after graduating.

Further complicating the matter is the fact that, for college students, many internships are pursued during the summer and outside of the cities and towns in which they go to school. For the student at Rice, a summer internship at a magazine in New York doesn’t come with room & board attached, the way an in-semester internship might for a student at NYU. Obviously, this is not to suggest that all colleges and universities should be forced to locate themselves within commuting distance of a major metropolis. But it does illustrate how unpaid internships as a phenomenon massively favor those with the resources (often familial) to support an unpaid sojourn in an expensive city.

Conservatives like to talk about equality of opportunity, but I’m sure they would agree that, functionally, this is a complete fantasy; some people will always be endowed with factors that give them a leg up on their competitors (genetics, familial wealth, geography, just to name a few). What we really should be saying is a minimum acceptable level of equality of opportunity. Thirty or more  years ago, that was probably conceivable insofar as you didn’t need to have an unblemished resume, or top college degree, or any college degree to partake in the fruits of American society.**** But today? I’m not so sure. And so I think if you’re serious about ensuring there exists a minimum acceptable level of equality of opportunity in the United States, you can’t be completely sanguine in the face of the continued rise of the unpaid internship. But I’m skeptical that it’s a problem we can regulate out of existence without imposing costly unintended consequences.

Whether or not unpaid internships persist as currently practiced, I don’t think it’s unreasonable to expect better from employers. Admittedly n=1 is a small sample size, but here’s an unpaid internship posting the Globe article cites at its conclusion:

Marketing/Social Media Intern

At cookbook publisher Harvard Common Press in the South End

DUTIES Conduct market research, help with mailings, write press releases and other materials, assist with accounts receivable and payable, represent the company at trade shows, monitor and post to social media, assist in events.

COMPENSATION “Interns leave with a letter of recommendation, a stronger resume, and valuable publishing experience,” according to the posting.

That’s called a job. Plenty of people out there want one. Hire somebody.

*Matt Yglesias agrees, at least on this point, for those of you scoring at home
**Probably loads more things, too
***Read into it what you will that my answer is likely something along the lines of, “Erm…hmm…yes, I see your point. And his. And hers. And those contradictory points make sense, too.”
****The era’s more overt racism and sexism notwithstanding