Since early 2012, this blog has reported several times on emerging issues surrounding internships. In some cases, what appears to be a win-win for employers and unemployed professionals, an internship opportunity can actually leave employers vulnerable to alleged back pay under state and federal laws such as the Fair Labor Standards Act (FLSA). As we reported before, setting up and administering an unpaid internship in a for-profit setting requires care to ensure compliance with those laws.

There are of course circumstances where for-profit employers have been able to legally provide training and learning opportunities to interns, free of monetary compensation. But in these instances, an intern must qualify as a trainee, not an employee. To determine whether an internship is training and not employment, the U.S. Department of Labor (DOL) developed six criteria to apply. These criteria look at the educational, beneficial, and financial aspects of the relationship.

In what was perhaps an effort to have the DOL expound upon these criteria, this past May, the American Bar Association wrote to the agency for some assurance that it would allow law students and recent grads to work on pro bono matters in unpaid internships with for-profit law firms and corporate legal offices.

Well, the DOL has spoken.

In a response letter issued Thursday, the DOL clarified its guidance as it pertains to law students and pro bono internships with for-profit law firms. It also reaffirmed its position on for-profit work without compensation. According to the DOL, as long as the intern is either a law student or a recent grad who took/intends to take the bar within one year, an internship at a for-profit firm can be unpaid if:

  • The internship involves only non-fee-generating pro bono matters;
  • The internship provides the student professional experience in alignment with their education;
  • The hiring of unpaid law student interns does not displace regular employees;
  • The law student is not necessarily entitled to a job at the conclusion of the internship; and
  • The law firm and the law student agree that the student is not entitled to wages.

In addition, the DOL noted the importance of written assurances and ample supervision.

Sound familiar? Some may say that the DOL’s clarification is pretty unremarkable and just a reiteration of its already released guidance, merely applied to the law firm setting. But with the curtain pulled, does the DOL provide a roadmap to other for-profit companies on how to structure unpaid internships to comply with the FLSA?

We think so. At least to some extent. Keeping in mind existing guidance, what appears to be increasingly important to remember when considering bringing on unpaid interns, whether legal or not is to:

  1. Ask who is getting more out of the gig, the intern or employer? If it is the latter, restructure things.
  2. Provide written assurances that interns will receive educational experience related to the field in which the intern is working.
  3. Ensure the intern has ample supervision from employees. Consider assigning interns to a team of individuals to cover all bases. Remember, if the intern does not receive enough supervision or guidance from an employee, the intern risks being considered an employee for FLSA purposes.
  4. Also remember that the determination of whether an internship meets the training exclusion depends on all the facts and circumstances of each student’s case, not just the six highlighted by the DOL.
  5. Finally, and when in doubt, revise internship programs to pay at least minimum wage.

The DOL’s view is not the be all and end all. Some courts make it easier for an employer to provide unpaid internships than the DOL’s guidance. Regardless, stay tuned to see how this clarification impacts internships and litigation, both pending and future.