There is no such thing as a free lunch. Except for Tuesdays at Hillel on the University of California, Davis Campus. Granted they don’t have much more variety than bagels, cream cheese, and baby carrots - or so was the case when I was in undergrad there six plus years ago - however, the notion of a free lunch is always intriguing and as such, I was a Tuesday regular.
With the economy being what it is today, it seems that more people are intrigued by getting a free lunch whereas the handouts available are concurrently decreasing. Even attorneys today are keeping a tighter grasp on their five-figure incomes, when they previously expected, six - plus benefits, a bonus, a box seat at sports arenas, and the dream of home ownership. Not only are attorneys suffering the blows of economic decline but other professions as well. It seems that the more you study, the more opportunities there are to work for free.
It used to be that only non-profits and government organizations offered free internships in exchange for one inch of resume space and a glorious queeziness come rent day. With layoffs, and higher competition for each spot in the corporate world, we find ourselves willing to accept less, and do more, in order to get our over-educated ramen-fed feet in the door. A friend of mine runs a wellness-related business, which is beyond successful, as she is a genius. However, given that wellness is a luxury rather than a responsibility in America, she is not raking in the dough, yet. She mentioned that she is getting daily emails from students requesting to intern for her for free! She sounded eager to accept the quid pro quo of free labor in exchange for them getting some experience. My initial reaction was "there is no such thing as a free lunch!", wage laws must apply unless the internship is through a non-profit and/or government agency. So I poked around Westlaw in exchange for some highly-valued supplement recommendations, and what I found was that there is no such thing as a free lunch, but it is much cheaper than I originally expected.
It appears that any organization is capable of having a free intern, but, that in order for this to be possible, distinct and not so free criteria must be met. First, by definition, the intern must not be an "employee." The Federal Labor Standards Act requires each employee to be paid at least minimum wage with few exceptions. Section 3(g) of the Act defines "employ" as "to suffer or permit to work" and 3(e) defines "employee" as "any individual employed by an employer." Useful language? [Insert snarky chuckle here]. The act does cover trainees, beginners, apprentices, or learners IF they are employed to work for an employer for compensation.
Hopefully, at this point you are realizing that the ticket to a free intern is to make them look, smell, and taste like the furthest thing from an employee. If they don't look, smell, or taste like an employee, they aren't, and thus, they are not covered by the Federal Labor Standards Act. (I'm saving the issue of tasting interns for another Law Bites Newsletter.) The Supreme Court in Walling v. Portland Terminal addressed the issue of unpaid interns. In that case trainees learning the duties of railroad yard brakemen received no compensation for initial services provided to the railroad. The court determined the railroad did not owe the trainees at least minimum wage as the trainees were not employees by definition. The court outlined the exact parameters necessary to evade the Federal Labor Standards Act. These are the same parameters followed by California's Division of Labor Standards Enforcement:
1) The trainee is a prospective member of the field. Using my Wellness friend as an example, her intern would need to be registered for a nutrition or medical major or have graduated with such a degree.
2) The trainee is provided with a practical course of training. I.e. she's not cleaning your light bulbs and fetching your cafe latte light, but rather acquiring skills in research and applying academic knowledge in practical situations.
3) The trainee does not displace a regular employee. Self-explanatory enough.
4) Employees do most of the work themselves. This is basically a reiteration of the third parameter. If you already have a running business with employees, the new trainee does not decrease the work of the other employees.
5) The trainee is closely supervised by other employees.
6) The trainee's work does not expedite the company business, but may delay or retard it. Sold yet?
7) The trainee is not employed or paid. Basically, if you sign an employment agreement and are paying the trainee, you shot yourself in the foot and can no longer call them a free intern.
In my opinion, the most critical parameters are numbers five and six. The Federal Labor Standards Act was imposed in the interest of public welfare. If the supreme court is going to carve out an exception to the Federal Labor Standards Act, or more rightly, determine that a circumstance is not governed by the FLSA, it is going to do so with good reason. Again, the definition of employ is "to suffer or permit to work." In order to evade this definition it must be shown that the trainee is working for his or her own advantage. Thus, the trainee is not working for the benefit of your company but rather for their own benefit on your premises. The internship is meant to greatly benefit the trainees at no charge to them, rather than provide the company a free lunch.
Here again, I am going to point to numbers five and six of the parameters. In order to have a free intern you must expend resources in closely supervising, training, and scrutinizing them. Meaning your are paying employees or spending your time to provide the intern training. Also, in order to be able to classify the trainee as an intern rather than employee they must not add significant value to your business or expedite your productivity. Rather, the case must be that the time and effort spent in training and evaluating the trainee actually is a hindrance to the usual flow of business.
On the bright side, free internships are possible. The down side is that they are not meant to provide business an immediate advantage, but rather, meant to provide new prospective members of the field training. If you've gotten to this point in the newsletter, a free intern is probably starting to sound more comparable to Hillel's stale bagels and baby carrots, hence the analogy.
Prior to starting a training program, it is highly recommended to meet with an attorney in order to draft and assemble all of the preliminary paperwork necessary. Unfortunately, you should always protect yourself, even prior to hiring the freest of interns. A cute intern today can turn into an ugly law suit for unpaid wages tomorrow. With the proper legal planning, preparation, and paperwork, you can help train the future members of your profession. Also, after the sunk cost of training is out of the way, they may contribute some competent benefit to your business?
Prior to starting a training program, it is highly recommended to meet with an attorney in order to draft and assemble all of the preliminary paperwork necessary. Unfortunately, you should always protect yourself, even prior to hiring the freest of interns. A cute intern today can turn into an ugly law suit for unpaid wages tomorrow. With the proper legal planning, preparation, and paperwork, you can help train the future members of your profession. Also, after the sunk cost of training is out of the way, they may contribute some competent benefit to your business?
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In some jurisdictions, portions of this website may be considered advertising. The hiring of an attorney is an important decision, and should not be based solely upon written information about our qualifications and experience. We do not desire to represent clients based upon their review of any portions of this newsletter that do not comply with legal or ethical requirements.
Newsletters and articles are offered only for general informational and educational purposes. They are not offered as and do not constitute legal advice or legal opinions. This Newsletter may contain hyperlinks to other resources on the Internet. These links are provided as citations and aids to help you identify and locate other Internet resources that may be of interest, and are not intended to state or imply that we sponsor, are affiliated or associated with, or legally authorized to use any trade name, registered trademark, logo, legal or official seal, or copyrighted symbol that may be reflected in the links. Please include the following information when citing this Newsletter: Grutman, N., “Headline: Unpaid intern cooks free lunch.” Weblog entry. Law Bites. July 20, 2012. Date accessed (http://lawbites.blogspot.com/2012/07/headline-unpaid-intern-cooks-free-lunch.html).
If you contact us through this website or otherwise in connection with a matter for which we do not already represent you, your communication may not be treated as privileged or confidential. The transmission of an email request for information does not create an attorney-client relationship and you should not send us via email any information or facts relating to your legal problem or question. If you are a client, remember that email may not be secure. There is a risk that your communication may be intercepted illegally. There may also be a risk of waiver of attorney-client privilege and/or work product privileges that may attach to your communication.
In some jurisdictions, portions of this website may be considered advertising. The hiring of an attorney is an important decision, and should not be based solely upon written information about our qualifications and experience. We do not desire to represent clients based upon their review of any portions of this newsletter that do not comply with legal or ethical requirements.
Newsletters and articles are offered only for general informational and educational purposes. They are not offered as and do not constitute legal advice or legal opinions. This Newsletter may contain hyperlinks to other resources on the Internet. These links are provided as citations and aids to help you identify and locate other Internet resources that may be of interest, and are not intended to state or imply that we sponsor, are affiliated or associated with, or legally authorized to use any trade name, registered trademark, logo, legal or official seal, or copyrighted symbol that may be reflected in the links. Please include the following information when citing this Newsletter: Grutman, N., “Headline: Unpaid intern cooks free lunch.” Weblog entry. Law Bites. July 20, 2012. Date accessed (http://lawbites.blogspot.com/2012/07/headline-unpaid-intern-cooks-free-lunch.html).
