As summer approaches, many small law firms receive emails from students interested in summer internships. Some students offer to work for free to gain experience. Law firms may be tempted to accept such offers, or even to advertise unpaid internships to increase productivity without increasing payroll.

However, a firm that hires unpaid interns may run afoul of wage and hour laws.

The federal Fair Labor Standards Act provides that individuals who are “suffer[ed] or permit[ted] to work” are employees who must be compensated for the services they perform. The United States Supreme Court has held that this definition cannot be interpreted so broadly as to make someone who works for his or her own benefit an employee of a company who provides training or instruction. The Department of Labor (DOL) has interpreted the applicable law to allow for unpaid internships at for-profit companies, but only in limited circumstances.

The DOL considers the following criteria in determining whether the existence of an unpaid internship or training program precludes the creation of an employment relationship that would otherwise require the payment of wages:

• 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;
• The internship experience is for the benefit of the intern;
• The intern does not displace regular employees, but works under close supervision of existing staff;
• 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;
•  The intern is not necessarily entitled to a job at the conclusion of the internship; and
• The employer and the intern understand that the intern is not entitled to wages for the time spent in the company.

The California Division of Labor Standards Enforcement has adopted similar criteria for determining whether an individual is an employee entitled to compensation under California law.

Thus, law firms who utilize unpaid interns to perform productive work, such as clerical work or research for client matters, run the risk of violating laws requiring that employees be paid.

About the author:

Sonya Smallets is a partner at Minnis & Smallets, where she represents employees in discrimination, harassment, whistleblower, wrongful termination, and related matters.