Authored by Adam Smiley
This blog has often reported on the rise of unpaid internship lawsuits. (See here and here.) These suits have been driven by an aggressive plaintiffs’ bar that smelled opportunity based on a number of convenient facts: many employers have an internship program, formal or informal; many interns are unpaid, or if paid work enough hours so that their effective hourly rate is below minimum wage; federal and state agencies are increasing their scrutiny of suspected wage violations; and every unpaid intern is a potential client. Add to the mix the continuing weak job market, especially for new college graduates who are willing to work for free or sub-minimum pay to get a foot in the door with potential employers, and you have the recipe for a burgeoning trend of wage-hour litigation.
Recent events may give employers some additional bad news. The non-profit news organization Pro Publica reported last week about a new organization called Fair Pay for Interns, which recently convinced one university to revamp its online internship database to require employers to confirm that their internships comply with the U.S. Department of Labor Guidelines.
Employers seeking access to the database are warned that “questionable” internship postings may be removed. The database also requires employers to specify the compensation arrangements for the internship. This change was in response to employers that posted their internships as “paid,” but compensated students with academic credit rather than cash. Now, in order to post, employers must list whether their internship is unpaid, paid with academic credit, academic credit only, or stipend.
So why should you care about the internship practices of one university? Two reasons:
First, the “intern fair-pay” movement is likely to spread across college campuses—maybe not with the speed of Facebook circa 2004, but quickly to be sure. We predict that within the next year, similar campaigns will result in numerous other schools implementing internship “checks” like these.
Second, the focus on DOL compliance puts employers in a delicate position. If an employer fails to confirm its compliance with the DOL guidance, it may not only lose the ability to post its internship opportunities or attract the best candidates, but it may also paint a bulls-eye on its back for a lawsuit by an enterprising plaintiffs’ attorney. Those employers that do confirm their compliance with the guidance, however, must actually deliver on that commitment, since interns whose experience is not consistent with that commitment could be more likely to sue given their increased awareness of the legal landscape.
In fact, the New York Times recently reported on the growing cohesiveness of the intern community. For example, websites provide forums for interns to “gather and commiserate” while numerous blogs allow interns to anonymously vent about their experiences. The creative industry even has a biannual magazine (aptly titled, “Intern”), dedicated to “initiating a long overdue and frank debate about the current state of the intern culture and its implications in both the short and long term” and to “empower interns.” Employers that provide internship experiences that fall short of the DOL guidelines, or fall short of expectations in general, risk identification and scrutiny through these outlets.
The bottom line: employers should remain prepared for increased scrutiny of their internship programs, not only from lawyers, but now also from colleges and students.