A Focus on Unpaid Internships and The Law
Over the 17 years that Dream Careers has been in operation, one of the most frequent questions posed to our staff is “are unpaid internships legal?”.
The quick answer is yes. Most internships are in fact, unpaid. Though our company remains agnostic to whether an intern is paid or unpaid, we have strong opinions on employers working with a Managed Internship Provider (MIP) for structure and to reduce legal risk in having unpaid internships.
Let’s Define What An Internship Is
One standard definition of the word “Internship” has been hard to nail down over recent years. We know that not all internships are the same. Even more confusing, some internships are paid positions, while others are offered as an unpaid position. At best guess, there are over 1.5 million internships offered each year, and it is agreed that the majority of these internships are unpaid positions.
Courts Make An Opinion
When an employer offers a student a paid internship, that intern is considered an employee for this company. As an employee, the intern is protected by all rights and coverage afforded to you by the Department of Labor and various other state and local regulations covering employment law (at least for those interns in the United States). But, what standards are used to support an Unpaid Internship? Thankfully several courts have weighed in with their opinion on this question. According to the U.S. Court of Appeals for the Second Circuit in New York, “the proper question is whether the intern or the employer is the primary beneficiary of the relationship.” Glatt v. Fox Searchlight Pictures, Inc., et al., Nos. 13-4478-cv, 13-4481-cv (2d Cir. July 2, 2015).
There are seven specific components covered by the Second Circuit’s “Primary Beneficiary Test" that make up the definition of an Intern in an Unpaid Internship offered by a For-Profit Employer.
In the summary below we have listed each of the seven components and provided specific details regarding how our fully Managed Internship Program is designed to meet or exceed each deliverable:
1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
At Dream Careers, participants view a full detailed description of the internship and its compensation structure. Participants sign our terms and conditions contract stating that their internship will not be paid unless otherwise notified. Additionally, participants sign an offer letter that also states whether the position is paid or unpaid.
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
All of Dream Career interns participate in our career development program, which includes: testing, surveys, career coaching, educational workshops and professional seminars. The academic merit and outcome are evaluated and approved for each internship before making the internship available to our participants.
3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
All Dream Careers’ participants receive college credit for their participation in the program.
4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
Dream Careers program precisely aligns with the academic calendar of the participant’s university to ensure that its a compliment to their educational experience.
5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
Our Managed Internship Programs have internships that are 8-12 weeks in length. This timeline is established and agreed to by the participant and the sponsor before the start of the internship. This is a standard timeframe for most student internships to meet the academic deliverables of the program.
6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
Dream Careers works with employers on a structured internship program that offers learning opportunities for students. Some employers will focus on project-based work with a beginning, middle and end (deliverable). Other employers are given guidance on building out deliverables over an eight week period. Managed Internship Providers can also help counsel students during the internship, for any course correction. Additionally, they can give the manager advise during the program, to make certain that the intern is getting significant educational benefits.
7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
Participants of Dream Career programs are fully briefed and expectations are clearly set in advance of the start of the internship. The interns' acceptance letter specifically stipulates that there is no guarantee that their internship acceptance will result in a job offer. With over 17,000 participants, we have never had any conflict where a participant believed they were entitled to a job offer after completing the program.
Managed Internship Providers like Dream Careers, have the coordinated framework required to support and define Internship best-practices. They can ensure that you are legitimately and ethically running an Internship Program that meets and exceeds the objectives of students, colleges and universities and the law of the land.
Better Outcomes For Employers and Students
We align Academic Merit, Employer Practices, and the Intern Experience to the criteria that defines an internship set by the FLSA, NYLL, and the Primary Beneficiary test, this includes:
Academic Merit – To ensure that an internship is educational, and thus eligible to be considered a legitimate internship, we align all educational learning objectives/goals to academic credit with the intern’s university. This is in support of their learning and serves as an extension of the classroom.
Employer Practices ‐ While academic credit alone cannot legitimize a paid/unpaid internship experience, to be identified as an internship. We coordinate with each employer to ensure that supervision for the skills and knowledge provided to the intern are not simply to advance the operations of the employer but designed to benefit the intern’s knowledge of the industry.
Intern Experience – Our comprehensive programs provide housing, meal plans, planned program events, daily transportation to and from work, and career-oriented training to ensure that the employer objectives are aligned to academic requirements and are for the benefit of the intern. Our programs make for a fun, safe, and extremely valuable experience for college students to explore a career in their desired city.
Via our structured academic internship program, educational institutions and employment professionals can work collaboratively to ensure that an experience meets and adheres to the criteria noted above. You can be confident in the internship experience that you build will benefit all.
||Eric Normington is the CEO of Dream Careers, the leading internship program for college students. Eric has dedicated the last 17 years of his life to helping companies and universities identify valuable components of an internship program while leading the discussion about internship standards and best practices throughout the industry.