Client Alerts & Publications

Class Action Risk For Unpaid Internship Programs

The wave of class actions in the United States now includes a full frontal assault on unpaid internship programs, with plaintiffs’ attorneys securing some successful preliminary results in the Southern District of New York. These recent decisions should prompt all employers with unpaid internship programs to consult with qualified legal counsel to attempt to reduce or eliminate risk of suit while these issues wend their way through the appeal process and uniform guidance is available to employers.

These arguments by creative plaintiff’s lawyers to argue that unpaid interns are really employees in disguise are not new, but they have in the last sixteen months been renewed with vigor. Plaintiff’s lawyers have sought a strict application of a U.S. Department of Labor Wage and Hour Administrator’s six part test of determining when a trainee is not an employee. Under this test, an intern is not an employee if:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the bene t of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. 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;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship. (emphasis added).
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