Six major higher-education groups are urging a federal appellate court to defer to colleges to determine the value of unpaid internships, which some critics say exploit students while providing employers with free labor. Colleges are uniquely qualified to decide whether students benefit from real-world experiences where they can apply their knowledge and get a foothold in a tough job market, the groups argue in a brief filed this month.
Led by the American Council on Education, the groups are weighing in on a pair of cases before the U.S. Court of Appeals for the Second Circuit that could limit colleges’ ability to integrate unpaid internships with companies into their curricula.
A rigid interpretation of federal labor rules may scare off companies from offering internships, some campus officials worry, and eliminate valuable learning opportunities for students. Colleges are gatekeepers, who make sure the experiences are educationally sound, the officials argue.
Others contend that colleges, by offering academic credit for free work, are accomplices in a system that takes advantage of students.
Unpaid interns sued companies in the two cases now on appeal before the Second Circuit. In one, a lower court ruled last year that a Hollywood entertainment group had violated the Fair Labor Standards Act by taking on two unpaid interns in the production of the movie Black Swan. Fox Searchlight Pictures benefited from the interns’ work, which included answering phones and taking lunch orders, while the students gained little educationally, the judge found.
The ruling gave class-action status to interns in several divisions of the parent company, Fox Entertainment Group, which filed the appeal.
The other case involves a class-action lawsuit against the Hearst Corporation. Initiated by a former intern with Harper’s Bazaar magazine, the case was dismissed by a lower court.
While the higher-education groups aren’t taking a position in either case, their brief “stresses the increasingly vital role internships and cooperative education play in postsecondary education,” according to a statement that accompanies the brief.
“We want to make sure the court recognizes the educational value of internships and doesn’t, perhaps inadvertently, cut off the ability for students to engage in experiential learning,” Ada Meloy, general counsel of ACE, said in an interview.
Labor Law
Students covet internships these days. Nearly two-thirds of last year’s graduates participated in an internship or cooperative-education assignment sometime during college, the National Association of Colleges and Employers reports. Almost half of the positions were unpaid.
Of the unpaid internships, 38 percent were with private, for-profit companies, making them subject to the Fair Labor Standards Act. The rest were with nonprofit organizations or government agencies, which are generally exempt from those rules.
In 2010 the U.S. Department of Labor issued a six-point “test” to determine when interns at private-sector companies can work without pay. Key points are that the internship must be similar to training a student would receive in college, and that the more the internship is structured around an academic experience, the more likely it is to be permitted. “This often occurs where a college or university exercises oversight over the internship program,” the guidelines say, “and provides educational credit.”
Companies have widely interpreted that language to mean that, as long as interns are earning academic credit, it is legal not to pay them. The judge in the Fox case, however, said that’s not necessarily true.
Since then the Labor Department has demanded back wages from about a dozen companies. Faced with such pressures, some employers have started paying interns or have simply discontinued their internship programs.
Meanwhile, colleges and employers committed to continuing credit-based internship programs are trying to make sense of the legal requirements. Under the government’s test, an unpaid intern can shadow an employee but do “no or minimal work”; the employer may not derive any “immediate advantage from the activities of the intern.” Educators wonder what company would agree to that arrangement and what college would grant credit for it.
Some colleges are responding by getting tough with employers and warning students to be wary of unpaid internships. New York University’s career center now requires employers to specify whether their internships meet the government’s guidelines before posting them. And Columbia, Harvard, and Yale Universities have stopped offering credit for unpaid internships.
A Proposed Solution
The six higher-education groups, meanwhile, have offered their own proposal to clear up the confusion and allow for-credit internships to continue.
Such internships should be allowed, the groups argue, when their main purpose is to educate and mentor students, when they don’t displace or duplicate the work of paid employees, and when the employer has made clear from the start that the students won’t be paid or promised a job.
Rather than being subject to the government’s six-point test, the higher-education groups propose, unpaid internships should be legal if the intern, not the employer, is the primary beneficiary.
“These experiences should not be curtailed by the mechanical application of a law intended to regulate employment, but which was not intended to regulate education,” the brief says. The Fair Labor Standards Act, it says, “does not define or contemplate the condition or status of the modern student intern.”
In a well-run internship program, the groups say, a college supervisor screens employers, makes sure students are being mentored and taught, and steps in if abuses occur.
Joining ACE in the brief were the American Association of Community Colleges, the American Association of State Colleges and Universities, the Association of Public and Land-Grant Universities, the College and University Professional Association for Human Resources, and NASPA: Student Affairs Administrators in Higher Education. Their arguments are similar to those of 13 college presidents who, four years ago, signed a letter urging the federal government to leave oversight to them.
Many students express gratitude for their experience in unpaid positions. “In class, I was learning how to write press releases and put together media kits, and my internships allowed me to do that for actual clients,” says Kate Scott, a senior communications major at Boston University. She has completed five unpaid internships in four years, two of them for academic credit. She never felt exploited, she says, and one of her internships led to a job at a local lifestyle magazine.
But where some see opportunities, others see the potential for abuse. The lawsuit against Hearst contends that “employers’ failure to compensate interns for their work, and the prevalence of the practice nationwide, curtails opportunities for employment, fosters class divisions between those who can afford to work for no wage and those who cannot, and indirectly contributes to rising unemployment.”
For the time being, colleges are treating unpaid internships as training, amping up oversight and sometimes offering stipends to make taking the positions possible for more students. The cases before the court, the higher-education groups say, could help separate the “true educational experiences from exploitive, thinly disguised evasions” of labor law.
