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Source: http://www.onedayoneinternship.com/blog/are-unpaid-internships-illegal/ http://www.onedayoneinternship.com/blog/are-unpaid-internshi... The U.S. Depart
by cj 17y ago
Source: http://www.onedayoneinternship.com/blog/are-unpaid-internships-illegal/ http://www.onedayoneinternship.com/blog/are-unpaid-internshi...
The U.S. Department of Labor’s Wage and Hour Division created a test to determine whether a “trainee” or intern is considered an “employee” based on a 1947 Supreme Court decision that evaluated whether “prospective train yard brakemen were ‘employees’ within the meaning of the Fair Labor Standards Act.” The test requires that all 6 of the following statements are true about the intern’s time with the company.
1. If the training, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in a vocational school;
2. If the training is for the benefit of the trainee;
3. If the trainees do not displace regular employees, but work under close observation;
4. If the employer that provides the training derives no immediate advantage from the activities of the trainees and, on occasion, the employer’s operations are actually impeded;
5. If the trainees are not necessarily entitled to employment at the completion of the training period;
6. If the employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.
This is the law. If any one of these six statements is not true about a given internship, then the interns are considered “employees” and are subject to the monetary provisions of the Fair Labor Standards Act. That means that the interns are entitled to minimum wage and overtime compensation.
- ig1 17y agoI'm guessing 3 is the tricky one for most startups. The uk has somewhat similar legislation, and it's generally considered that if the intern is doing work which otherwise would have to be done by a full employee then it's displacing a regular employee. Which in practice means you can't give interns "real" work. edit: tptacek below is right that 4 is probably worse
- tptacek 17y ago(4) looks worse. Really, though, who has time for any of this? Just pay your interns.
- codexon 17y agoI think there may be a loophole. Without naming any names, there was a law based start-up (with lawyers on the board and founders) in the US that wanted me to work for them for free for a while, and then maybe be hired as a salaried employee. I declined the offer since it seemed like a poor deal and the company was in dire straits, but they told me that they had at least one person work unpaid for several months before being hired.
- jackowayed 17y agoI'm pretty sure the only loophole is the necessary authorities not knowing about it.
- codexon 17y agoAre you saying that because you actually read the laws, or are you just trying to sound clever? Lawyers are a careful bunch, always having long disclaimers on their websites. I have trouble believing they would bet the future of their million+ funded start-up by depending on the ignorance of authorities. The IRS isn't stupid.
- jackowayed 17y agoI've heard of this consequence of that act a few other times and never heard "but you can get around it if ..." So it's just a guess, but not one that's totally unsubstantiated. And plenty of people break tax laws. I read (on HN, I think) that something like 1/3 of people who work as private contractors under-report their income (which is part of why the IRS is cracking down on "contractors" that really are more like employees). Lots of people work under the table. Until the IRS started asking for the SSNs of people's dependents, lots of people had fictional dependents. (Millions fewer dependents were claimed the first year it was required than the previous year.) The IRS can only audit a tiny percentage of filings. And if it were a 100% unpaid internship where they didn't even pay for a plane ticket or anything, there might be no trace of it anywhere that an audit would see.
- ig1 17y ago
- qeorge 17y agoShort version: You can't have unpaid interns, unless you're really just doing it for their benefit because you're a nice person. If they generate any value for you, its illegal. This situation is clearly against the spirit of the law. I am surprised they're being so forthcoming about it. Besides, as Thomas pointed out, can you really not come up with $10/hour to pay your intern?
- WillyF 17y agoI wrote the original article, and since then I've done a ton of interviews on the topic with some big name media outlets. I'm not a lawyer, but I have looked at the topic in depth. Basically, there are very few cases when unpaid internships are legal. However, there is almost no enforcement of these laws. I haven't heard of anything recent, and I watch the topic pretty closely. A lot of companies think that requiring students to get "college credit" for their internships provides a loophole to get around the law, but as far as I can tell that's not the case. This is especially interesting, because more and more graduates are taking unpaid internships, which shows that employers are getting even more brazen. My philosophy is that you shouldn't pay your interns because you have to legally; you should pay them because they're worth it. If you can't find a way to make more off of the intern than the $10/hour that you need to pay him or her, then maybe your business isn't ready for interns.