On Behalf of | Apr 20, 2015 | Overtime Pay, Wage Theft, Wages & Hours

Unpaid internships, long a staple of the American workplace, are coming under increasing legal scrutiny. A recent spate of collective and class actions alleging violations of the Fair Labor Standards Act (“FLSA”) and corresponding state labor laws have been filed by former interns, claiming they should have been paid the minimum wage and overtime for their hours worked for the employer.

Whether a particular internship can be unpaid is not clear under the law. The federal Department of Labor provides a six factor test regarding unpaid internships, as listed in the U.S. Department of Labor Wage and Hour Division’s Fact Sheet #71.

In order to qualify as an unpaid internship:

  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.

While this standard is not uniformly applied by the courts, and is currently under review by the Second Circuit in the Fox Searchlight case, employers continue to pay large settlement figures in the meantime. Recent collective and class action settlements (pending final approval by the Court) include:

•1. Saturday Night Live: $6.4 million;

•2. Conde Nast: $5.8 million;

•3. Viacom: $7.2 million;

Until the legal standard for unpaid internships is clarified by the courts, employers are likely to reduce or eliminate their unpaid internship programs in order to avoid any further financial liability. Therefore, what some interns may gain in financial compensation, other will lose out on actual internship opportunities.

Darren Rumack is an associate at the Klein Law Group P.C., which represents employees in all areas of employment discrimination and unpaid wages law, workers’ compensation, and Social Security Disability. The Klein Law Group P.C. is located at 11 Broadway, Suite 960, New York, NY 10004 and can be reached at 212-344-9022.