Time comes to the end of 2019. A lot of students start to hear back from their job interviews. Recently, several students shared the good news with us that they got job offers, and some of them got “unpaid internship” offers. Whether an unpaid internship is a valuable job opportunity for career is not being discussed today. Instead, the question comes in front of us is whether it is legal for a “for-profit” employer to provide “unpaid internship” offer to students.
The answer to this question is in The Fair Labor Standards Act (FLSA). Most of us have heard that, if you work for a “for-profit” employer, you need to get paid. However, according to a fact sheet provided by US Department of Labor and decided cases, interns and students may not be “employees” under the FLSA. That is being said, under some circumstances, even if you work for a “for-profit” employer, you might not entitle to compensation for your work.
It is certain that under FLSA, an employee cannot waive his right to the compensation for his work. Courts use the “primary beneficiary test” to determine whether an intern or student is an employee under FLSA. (See example, Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528 2016) Courts identified the following factors as part of the test:
- The extent to which the intern and the employer clearly understand that there is no expectation of compensation.
- The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
- The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
- The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
- The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
- The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
- The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
This test is a flexible test, and the factors are non-exhaustive. Courts may consider relevant evidence and the touchstone of the analysis is the “economic reality of the relationship”. (FLSA, § 3(e)(1)) The determination depends on the unique circumstances of each case. As long as the intern or student is determined as an employee, he’s entitled to both minimum wage and overtime pay under the FLSA.
Some students are desperate finding a job offer and are willing to work just for experiences. Many employers make their unpaid employees to sign something like an “unpaid intern agreement” to avoid liabilities. Whether to accept a offer like such is a personal choice. But, if you feel your right is being violated, consult a lawyer. For international students, we strongly suggest lawyers with immigration law background.
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