Bona Fide Volunteer or Unpaid Employee?
The Applicability of the United States and Massachusetts Minimum Fair Wage Laws to Unpaid Internships
by Attorneys Morris N. Robinson, Matthew A. Morris, & Timothy R. Weeks
On April 2, 2010, the New York Times published an article entitled “The Unpaid Intern, Legal or Not”.1 Citing the National Association of Colleges and Employers, this article stated that 50 percent of graduating students in 2008 held internships, of which experts estimate that one-fourth to one-half are unpaid. There are several legal issues raised by internships – specifically unpaid internships – of which “for-profit” companies must be aware.
According to the New York Times article, the U.S. Department of Labor is cracking down on firms that fail to pay interns properly and many states have begun investigations and have fined employers. “For-profit” companies must be careful when hiring unpaid interns by keeping compliant with federal and state law. Although many unpaid internships involve some amount of unskilled work, it is clearly illegal not to pay interns when the job is mostly non-educational menial work, such as cleaning, copying, and making coffee.
Generally speaking, it is illegal to use an unpaid intern as a source of free labor to complete tasks that are typically assigned to paid employees. The United States Department of Labor issued specific standards regarding internships.2 Under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq., an individual who is employed to work must be compensated under the law for the services he or she performs for an employer. Interns in the “for-profit” sector must be paid at least the minimum wage and overtime compensation for their work unless their internship can be classified as a “training program.”
The determination of whether an internship or training program meets the exclusion in which the intern is not required to be compensated depends on all the facts and circumstances of the program. To assist in that determination, the following six criteria must be applied and evaluated:
- The internship (even if it includes actual operation of the facilities of the “for-profit” employer) is similar to the training which would be given in a educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under the close supervision of the existing staff;
- 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;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and intern understand that the intern is not entitled to wages for the time spent in the internship.3
If all of these factors are met, an employment relationship does not exist under the Fair Labor Standards Act, and the intern is not required to be paid for the services he or she renders.
The Massachusetts Department of Labor and Workforce Development, Division of Occupational Safety (“DOS”) adheres to similar principles as the federal unpaid internship standards.4 The Massachusetts Minimum Fair Wage Law applies to people employed in an occupation but not to interns being trained under training programs in charitable, educational, or religious institutions. Therefore, an internship can be unpaid if it is properly classified as a training program. In defining “training program,” the Department of Labor and Workforce Development consults federal law for guidance and specifically applies the six federal criteria listed above to determine whether a person’s work falls under the definition of a trainee. The DOS reviews the totality of the circumstances in evaluating whether a particular training program is properly classified as a training program in which a participant need not be compensated.
The Massachusetts DOS applies a similar standard in defining “volunteer” workers and again defers to factors used by the United States Department of Labor to determine volunteer status under the Fair Labor Standards Act.5 These include:
- The nature of the entity receiving the services;
- The receipt by the worker of any benefits, or expectation of any benefits, from their work;
- Whether the activity is less than a full-time occupation;
- Whether regular employees are displaced by the “volunteer;”
- Whether the services are offered freely without pressure or coercion; and
- Whether the services are of the kind typically associated with volunteer work.
Unpaid internships can be valuable opportunities to both the intern and the company, but it is essential that the program be educational and that all the federal and state laws are satisfied. If there is any deviation from these standards, the intern must be paid. As the acting director of the U.S. Department of Labor’s Wage and Hour Division stated, “if you’re a ‘for-profit’ employer or want to pursue an internship with a ‘for-profit’ employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law”.6
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1Steven Greenhouse, The Unpaid Intern, Legal or Not, THE NEW YORK TIMES (April 2, 2010), available at http://www.nytimes.com/2010/04/03/business/03intern.html?scp=1&sq=unpaid%20intern&st=cse.
2United States Department of Labor, Wage and Hour Division, Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act (April 2010).
4Massachusetts Department of Labor and Workforce Development, Division of Occupational Safety, Opinion Letter, MW-2002-013 (May 9, 2002).
5Massachusetts Department of Labor and Workforce Development, Division of Occupational Safety, Opinion Letter, MW-2002-021 (August 9, 2002).
6Steven Greenhouse, The Unpaid Intern, Legal or Not, The New York Times (April 2, 2010).
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