America's New Glass Ceiling: Unpaid Internships, the Fair Labor Standards Act, and the Urgent Need for Change
Hastings L.J., Vol. 61, July 2010
28 Pages Posted: 20 Sep 2009 Last revised: 7 Apr 2010
Unpaid internships are increasing in the United States, and one can surmise that they will become even more common as the economy continues to deteriorate. Many companies offer internships to recent college graduates or young professionals looking to gain experience in a particular field. Most such internships are not paid, especially in “glamorous fields,” such as politics or entertainment. Instead of wages, the company offering the internship promises the candidate “great experience” and an opportunity to get his foot in the door. Because employers respond favorably to internship experience on a resume, individuals see internships as increasingly necessary to be competitive in the job market. But without being paid, low-income individuals often cannot afford to take them. The increasing prevalence of internships thus raises a stark class divide between entry-level job-seekers who can afford the luxury of unpaid experience and those who cannot. Because employers may decide to hire unpaid interns instead of paid laborers, unpaid internships also indirectly contribute to rising unemployment.
These serious problems are exacerbated by the fact that the extremely convoluted and unclear nature of the federal law governing unpaid interns makes both regulation and reform nearly impossible. While it may seem at first blush that an unpaid internship is simply unpaid labor with a fancy name, and therefore illegal, the legal status of unpaid internships is anything but simple. Under current federal law, it is often difficult to tell whether an internship is illegal, and to even know where to begin in suggesting change. Indeed, suggesting change to the law governing unpaid interns begs the question: what law? This Note is therefore concerned with identifying the current state of federal law as it relates to unpaid interns, highlighting problems with the law, and pinpointing who needs to do what in order to bring the current state of the law into line with the original intent of the Congress that passed it.
The Note proceeds in four Parts. In Part I, I will elaborate on why unpaid internships are particularly problematic, and why the unpaid internship debacle is only getting worse. In Part II, I will provide an overview of the Fair Labor Standards Act (FLSA), the law most relevant to unpaid internships, and will highlight the inconsistent interpretation of the FLSA by the federal agency that administers it on the one hand, and by the courts on the other. I will show that the federal agency considers most interns to actually be employees covered by the FLSA while the courts do not, and will explain why this inconsistency aggravates the unpaid internship problem. Part III of the Note argues that the Wage and Hour Division must conduct a rulemaking to clarify the law. Part IV sets forth a proposed rule that will create an explicit “intern-learner” exemption to the FLSA, similar to the current “learner” exemption. This new Rule will benefit both interns and businesses, by clarifying that anyone who qualifies as an “employee” for purposes of the FLSA must be paid minimum wage, but allowing employers who create an approved “intern-training” program to pay their interns slightly less than minimum wage. This will subject internship programs to regulation by the Department of Labor and ensure that all who are legally entitled to wages receive payment, ultimately leading to a decrease in unpaid internships nationwide.
Keywords: Fair Labor Standards Act, FLSA, Unpaid Internships, Economic Realities, Wage and Hour Division, Department of Labor, Student, Six-Factor Test
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