the obama crackdown: another failed attempt to...

THE OBAMA "CRACKDOWN:" ANOTHERFAILED ATTEMPT TO REGULATE THE

EXPLOITATION OF UNPAID INTERNSHIPS

I. INTRODUCTION

Most jobs, regardless of whether they are paid, unpaid, volunteer, ortemporary positions, offer very different experiences. Unpaid internshipexperiences, in particular, have become progressively diverse as the numberof interns increases nationwide. While some of these unpaid positions arehighly exploitative, there are also a significant number of intemships thatoffer valuable educational and professional experiences. The following twostories exemplify the extreme diversity that exists among the unpaidintemship experience.

Jessica, a college student at New York University, was enthusiasticallylooking for an intemship for the summer following her sophomore year.Jessica was eager to pursue a career in animation. Although she had noexperience working in the industry, she felt an intemship would be the bestway to find out whether this was, in fact, her dream job. After months ofsearching, she finally secured an intemship with a mid-size animationstudio in Lower Manhattan. Although the position was unpaid, Jessica waspromised that the intemship would be highly educational and mightpotentially lead to some very good jobs in the future. Jessica was thrilledbecause she tmly believed that this intemship would finally give her thechance to learn hands-on about the inner workings of animation, andprovide her with invaluable opportunities to network with people in theindustry. Unfortunately, Jessica's fantasy did not materialize. On her firstday as an intem, Jessica was directed to the facilities department. Jessica'sassigned work had nothing to do with animation. Instead, Jessica's workinvolved cleaning the kitchen and bathroom facilities. Because she was

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inteming during the swine fiu epidemic, Jessica was also expected to wipethe doorknobs each moming in an attempt to reduce the spread of thedisease. Regrettably, Jessica's dreams were quashed that summer. She didnot leam anything about animation. Instead, she left that summer feelingdeceived and misused.'

On the contrary, Sam's unpaid intemship proved to be an invaluablelife changing experience. Sam was a 22 year-old college graduate with adegree in .American history. Unlike Jessica, Sam had no particular long-term career goals. He was desperate to find something that might interesthim. In his last semester of college, Sam began searching for possibleintemships. Sam applied to a number of different companies in a vastvariety of industries. Although a bit dubious about his interest in publicrelations, Sam accepted a six-month unpaid intemship in the mediarelations department of a professional sports team. He was immediatelyassigned various tasks such as drafting news releases, clipping newspaperarticles, and assisting with the community relations programs. In addition,Sam was permitted and even encouraged to participate in brainstormingsessions with high-level executives. Despite Sam's lack of experience, hisopinions and thoughts were received with the same respect granted to full-time employees. Unlike Jessica, Sam was leaming new things all the time.Although Sam did not enjoy every single aspect of the experience, hecomplied with his duties because he had found something that he trulyenjoyed doing. Sam continued to work as an unpaid intem until thecompany could afford to bring him on as a full-time employee. Today, Samowns his own PR firm that specializes in sports media. Although it wasdifficult to work without compensation, Sam consistently credits hissuccess to his intemship experience. Without that experience, Sam doubtshe would ever have found the career that he loves so much today.^

1. This narrative is based on an interview conducted by Steven Greenhouse. He discussesthis particular interview with Neal Conan during an edition of National Public Radio's Talk of theNation, which aired on July 13, 2010. To listen to the interview, or to read a transcript of thesame, see Questioning the Ethics of Unpaid Intemships, NAT'L PUB. RADIO (July 13, 2010),http://www.npr.org/templates/story/story.php?storyld=l 28490886. (Please note that certain partsof the story arejenhanced for purposes of this paper.)

2. This narrative is a composite of an array of intemship experiences that I encounteredwhile researching this article. See, e.g., Glenn C. Altschuler, COLLEGE PREP: A Tryoutfor theReal World, N.Y. TIMES, Apr. 14, 2002, http://query.nytimes.com/gst/fullpage.html?res=9A04E5D8163DF937A25757C0A9649C8B63&pagewanted=all; Dawn Gilbertson,Earning It; Glamorous Intemships with a Catch: There's No Pay, N.Y. TIMES, Oct. 19, 1997,http://www.nytimes.com/1997/10/19/business/eaming-it-glamorous-intemships-with-a-catch-there-s-no-pay.html?pagewanted=all&src=pm; Eve Tahmincioglu, Working for Free: The Boomin Adult Intems, TIME, Apr. 12, 2010, at 64.

2012] THE OBAMA "CRACKDOWN" 283

Although both Jessica and Sam had similar goals for their intemshipexperiences, only Sam had the opportunity to gain insight into his possiblecareer path. In reality, this inconsistency of experience involving unpaidintemships is not uncommon.^ While the exploitation potential for unpaidintemships often appears greater given the mere nature of the unpaidposition,'' there are a vast number of individuals like Sam who end uphaving life-changing experiences. Given this extreme disparity amongunpaid intemship experiences, how does the govemment effectivelymonitor these placements to eliminate the "bad" intemships withoutjeopardizing and interfering with the "good" intemships? To answer thisquestion, however, the govemment must first recognize, and moreimportantly appreciate, the fundamental relationships among students,employers, and academic institutions that inevitably develop with respect tounpaid intemship opportunities.

As the number of unpaid intemships increases nationwide,^discrepancies in intemship experiences increase and become proportionallymore difficult to manage.* While the number of students participating inintemships has consistently grown over the past few decades,^ today, in themidst of a catastrophic economic recession, the number of unpaidintemships has skyrocketed.^ Research by the College EmploymentResearch Institute and Intem Bridge found that three-quarters of the tenmillion students enrolled in four-year colleges and universities in the UnitedStates will work as intems at least once before graduating, and roughly one-

3. See David L. Gregory, The Problematic Employment Dynamies of Student Internships, 12NOTRE DAME J.L. ETHICS & PUB. POL'Y 227,241-42 (1998).

4. See id. at 242 ("Some employers regard unpaid intems as means to reduce, if not avoidaltogether, labor costs."); ,see also INTERN BRIDGE, INC., 2010 INTERNSHIP SALARY REPORT, 8(2010), available at http://utsa.edu/careercenter/pdfs/2010%20salary%20 report.pdf ("The mainpurpose for-profit companies have historically hosted intemship programs is to gain access tohighly qualified talent at low cost. . . [Thus,] [t]he main assumption is that for-profit companieshave a profit motive in the hiring of interns.").

5. Jessica L. Curiale, America's New Glass Ceiling: Unpaid Internships, The Fair LaborStandards Act and The Urgent Need for Change, 61 HASTINGS L.J., 1531, 1535 (2010)("Intemships in the United States are on the rise.").

6. See Questioning the Ethics of Unpaid Intemships, supra note 1 (noting the differencebetween "worthless, grunt work" and "really good intemships").

7. See David C. Yamada, The Employment Law Rights of Student Intems, 35 CONN. L. REV.215, 217 (2002) ("Between 1981 and 1991 the proportion of college graduates who intemedjumped from one in thirty-six to one in three."); see also Curiale, supra note 5 (noting that in1994, only sixty percent of graduating college seniors had participated in intemships, whereas in2004, roughly eighty percent of college seniors had participated in intemships).

8. See Steven Greenhouse, The Unpaid Intem, Legal or Not, N.Y. TIMES, Apr. 2, 2010, atBl, available at http://www.nytimes.com/2010/04/03^usiness/03intem.html?pagewanted=all.


third to one-half of these intems will not receive compensation.' Althoughno official number exists that quantifies the prevalence of intemships in theUnited States, evidence clearly shows that as job prospects diminish, unpaidintemships flourish.'" For example, job-search sites such as Monster.comand CareerBuilder reported significant increases in intemship postings."Even Stanford University's career center reported that it posted 643 unpaidintemship opportunities on its job board in 2010, which was more thantriple the amount posted two years ago.'^

Intemship experiences are professionally invaluable.'^ While not everyintemship can guarantee professional success, "unpaid intemships are agreat way to enter the work force."'" An intemship is valuable because itprovides the necessary hands-on leaming experience that many employersultimately require.'^ In fact, many employers "really prefer to hire a studentwho has experience in their field through an intemship or somethingsimilar, rather than a student without any experience."'* Moreover, anintemship is an important professional stepping-stone because it offers theintem the opportunity to "audition" for the prospective employer, whichcould very well lead to a compensated position at a later time.'^ Individualsare willing to work for free because intemships are considered "the mostbankable credential you can put on your resume."'^

The significance of intemship experiences has constantly been rising;however, in today's economy, unpaid intemships are even more valuablethan ever before.'^ According to a 2010 survey by the National Association

9. Ross Periin, Unpaid Intems, Complicit Colleges, N.Y TIMES, Apr. 2, 2011, at WKl 1[hereinafter Periin, Unpaid Intems], available at http://www.nytimes.com/2011/04/03/opinion/03perlin.html?pagewanted=all.

10. Greenhouse, supra note 8; see also ROSS PERLIN, INTERN NATION: HOW TO EARNNOTHING AND LEARN LITTLE IN THE BRAVE NEW ECONOMY xiv (2011) ("No firm figures for theintemship boom currently exist, but it is probably a conservative estimate that between 1 and 2million people participate in intemships each year in the U.S.").

11. Tahmincioglu, supra note 2, at 63, 64.12. Greenhouse, supra note S.13. See Gregory, supra note 3, at 241.14. Kathryn Ciano, Obama's War on Intemships (andFemale Employment), WASH. EXAM'R

BELTWAY CONFIDENTIAL BLOG (Apr. 5, 2010 2:00 AM), http://washingtonexaminer.

com/blogs/beltway-confidential/obama-s-war-intemships-and-female-employment.15. See Gregory, supra note 3, at 241.16. Id. at 241-42; see also PERLIN, supra note 10, at 28-29 (noting that among the employers

surveyed by the National Association of Colleges and Employers, 76.3 percent consideredrelevant work experience the "critical factor" in making hiring decisions).

17. See Gregory, supra note 3, at 241.18. Craig J. Ortner, Adapting Title VII to Modem Employment Realities: The Case for the

Unpaid Intem, 66 FORDHAM L. REV. 2613, 2619 (1998).19. See Tahmincioglu, supra note 2.


of Colleges and Employers (NACE), the most frequently expressedsentiment by college respondents was that "[a]ll intemships, even those thatare unpaid should not be restricted."^" One respondent, in particular, evennoted that "[a]ny intemship is better than no intemship."^' With limitedemployment opportunities, unpaid intemships are often the best altemativefor college graduates who desperately need to expand their resumes andacquire professional experience. '̂̂ Moreover, unemployed middle-agedprofessionals are even accepting unpaid intemships in hopes of minimizinglarge gaps in their resumes.^^ Even though jobs are scarce, collegegraduates and professionals "are often willing to work for free in hopes thatit will help them land a paying gig."^" In this economy, an intemship isoften their only hope.^'

This significant growth of unpaid intemships over the past few years,while advantageous for many students and unemployed professionals, hascontinued to raise concem for many federal and state officials.^* Fearfulthat this intemship upsurge would enable many more employers to abusethe minimum wage laws by exploiting intems as free labor, the Obamaadministration decided to "step up" enforcement.^' In April 2010, theUnited States Department of Labor (DOL) announced its plan to"crackdown" on unpaid intemships by releasing guidelines which clarifiedthe legal requirements for intemship programs under the Fair LaborStandard Act (FLSA).^^ These guidelines specifically set forth legal criteriathat must be satisfied for intemships to be legally unpaid.^' Given these

20. NAT'L ASSOC. OF COLLEGES AND EMP'RS, UNPAID INTERNSHIPS: A SURVEY OF THE

NACE MEMBERSHIP 4 (2010) [hereinafter NACE], available at http://www.naceweb.org/knowledge/intem_pay/.

21. Id22. See Questioning the Ethics of Unpaid Intemships, supra note 1.23. See Tahmincioglu, supra note 2.24. Id25. Amity Shlaes, Ivy Leaguers ' Career Path Slammed Shut by Obama, BLOOMBERG (Apr.

5, 2010, 6:01 PM), http://www.bloomberg.com/news/2010-04-05/ivy-leaguers-career-path-slammed-shut-by-obama-amity-shlaes.html.

26. See Greenhouse, supra note 8.27. See id28. Id29. WAGE & HOUR DIV., U.S. DEP'T OF LABOR, FACT SHEET #71: INTERNSHIP PROGRAMS

UNDER THE FAIR LABOR STANDARDS ACT 1 (2010), http://www.dol.gov/whd/regs/compliance/whdfs71.pdf [hereinafter FACT SHEET #71] ("1) The intemship, even though it includes actualoperation of the facilities of the employer, is similar to training which would be given in aneducational environment; 2) The intemship experience is for the benefit of the intem; 3) Theintem 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 theintem; and on occasion its operations may actually be impeded; 5) The intern is not necessarily


strict criteria, the DOL forewamed that "[i]f you're a for-profit employer oryou want to pursue an intemship with a for-profit employer, there aren'tgoing to be many circumstances where you can have an intemship and notbe paid and still be in compliance with the law."^"

While regulation is necessary to protect individuals from exploitativeenvironments, these new "crackdown" efforts have likely had "a chillingeffect on all intemships" because the threat of increased scmtiny inevitablyimpacts the willingness of employers to offer intemships."^' These"crackdown" measures, by eliminating important intemship opportunities,essentially harm the very same individuals the DOL regulations intend toprotect.^^ Rather than intimidate employers and reduce the availability ofunpaid intemships, the Obama administration should focus onimplementing regulation that specifically resonates with the fundamentalrole unpaid intemships play in our economy, especially during this currentperiod of economic uncertainty. To regulate unpaid intemships withouteradicating the entire intemship market, the DOL must implement a newstandard that penalizes the "bad" intemships without interfering with anddismpting the "good" intemships. Developing such a standard, however,ultimately requires an understanding of the dynamics among students,employers and academic institutions.

Part II of this comment discusses the current laws goveming unpaidintemships. Part III examines various problems conceming the currentlegal standard, specifically with respect to the present economic woes.Finally, Part FV argues the futility of a nationwide "crackdown," urges theObama administration to update the current regulation, and promotes thedevelopment of new laws that specifically consider the positions of thethree key players involved: the students, the employers, and the academic

entitled to a job at the conclusion of the intemship; and 6) The employer and the intem understandthat the intem is not entitled to wages for the time spent in the internship.").

30. Greenhouse, supra note 8.31. NACÉ, supra note 20, at 5 (emphasis added); see also John Stossel, Unpaid Intems Are

Exploited? How the Labor Department's New Rules Will Interfere With the Rights of Contractand Free Association, REAS0N.COM (May 6, 2010), http://reason.com/archives/2010/05/06/unpaid-intems-are-exploited (noting that part of the Obama administration's plan to"crackdown" on unpaid intemship involved hiring 250 new investigators to target private-sectorcompanies and ensure that their intemship programs were not in violation of the law).

32. See John Stossel, Pro-choice on Intemships, JOHN STOSSEL'S TAKE (May 10, 2010, 4:36PM), http://www.foxbusiness.com/on-air/stossel/blog/2010/05/10/pro-choice-on-intemships[hereinafter Stossel, Pro-choiee on Internships]; Perhn, Unpaid Intems, supra note 9 (noting thatthirteen university presidents responded to these "crackdown" measures in a letter addressed to theDOL stating: "While we share your concems about the potential for exploitation, our institutionstake great pairis to ensure students are placed in secure and productive environments that fiirthertheir education").


institutions.

II. LEGISLATIVE HISTORY

The FLSA, a federal statute that regulates employment in the United^̂ is administered by the Wage and Hour Division (WHD) of the

DOL.^" The FLSA requires that every employer pay his or her employee atleast the federally prescribed minimum wage.^' However, this minimumwage requirement only applies to individuals that are deemed "employees"within the meaning of the statute.''* Under the FLSA, an employee isbroadly defined as "any individual employed by an employer."" Althoughthe statute defines the term "employ" as "to suffer or permit to work,"^^ thedefinition of employee is considered to be "the broadest definition that hasever been included in any one act."^'

While statutory exemptions to the minimum wage requirements existfor "leamers," "apprentices," "messengers," and certain full-time students,""the FLSA "does not define what an intem is, nor does it exempt intemsfrom minimum or overtime wage provisions.""' Simply put, "there is nosuch thing as an 'intem'" under the FLSA."^ Because the FLSA fails to

33. 29 U.S.C. §201-219(2006).34. Id § 204.35. Id § 206.36. See Yamada, supra note 7, at 225.37. 29 U.S.C. § 203(e)(l).38. W. §203(g).39. Curiale, supra note 5, at 1539 (quoting United States v. Rosenwasser, 323 U.S. 360, 363

n.3 (1945)).

40. § 214 (permitting employment at a rate less than the minimum wage for people that fallwithin one these particular subcategories). The FLSA has also carved out an exception for"student-leamers"; however, this exemption is inapplicable to intems. See Curiale, supra note 5,at 1539 & n.5O; 29 C.F.R. § 520.300 (2009).

[A] [s]tudent-leamer means a student who is at least sixteen years of age, or at least eighteenyears of age if employed in an occupation which the Secretary has declared to be particularlyhazardous, who is receiving instruction in an accredited school, college or university andwho is employed by an establishment on a part-time basis, pursuant to a bona fide vocationaltraining program.

§ 520.300.41. Curiale, supra note 5, at 1539-40; see also Hillary J. Collyer, Interns and Trainees: Must

They Be Paid?, 20 VA. E M P ' T L . LETTER 6 (July 2008).42. Noel Tripp, We Don't Have to Pay Our Interns - Do We?, WAGE & HOUR L. UPDATE

(Apr. 6, 2010), http://www.wageandhourlawupdate.com/2010/04/articles/minimum-wage/we-dont-have-to-pay-our-intems-do-we/.

288 SO UTHWESTERN LA W RE VIE W [Vol. 41

address the status of intems, determination of whether unpaid intemshipsviolate the minimum wage requirements depends upon whether the intem isconsidered an "employee" under the FLSA.''^ Accordingly, two applicablesources of law are useful in determining whether an intem qualifies as an"employee" for purposes ofthe FLSA: 1) the WHD's six-factor test; and 2)a series of federal court decisions.'*^ While both the WHD and the courtsrely on the fundamental mies taken from the Supreme Court case. WallingV. Portland Terminal Co.,^^ their interpretations of the relevant standarddiffer significantly.''*

A. The Origin of Law

The legal standard applied in determining whether an intem qualifies asan employee for purposes of the FLSA stems from the 1947 decision inPortland Terminal Co.^^ In Portland Terminal, the Court held that therailway trainees were not entitled to minimum wage because they were notconsidered employees under the FLSA.''^ Since the weeklong, unpaidtraining course did not "expedite the company business" or "displace any ofthe regular workers," the trainees were really working for the benefit ofthemselves.'*' The Court reasoned that "the definition 'suffer or permit towork' was obviously not intended to stamp all persons as employees who,without any express or implied compensation agreement, might work fortheir own advantage on the premises of another."^" Under thosecircumstances, "all students would be employees of the school or collegethey attended, and as such entitled to receive minimum wages."^' TheCourt further explained that although the definition of "employ" and of"employee" are extremely broad, they "cannot be interpreted so as to makea person whose work serves only his own interest an employee of anotherperson who gives him aid and instmction."^^ Thus, the Court made it clear

43.44.45.46.47.48.49.50.51.52.

See Yamada, supra note 7, at 225.See id. at 227-28.330 U.S. 148 (1947).See Curiale, supra note 5, at 1541.330 U.S at 151-52.Id at 153.Id. at 149-50.Id. at 152.Id.Id.

2012] THE OB AMA "CRACKDOWN" 289

that in cases conceming "trainees," employers may not be subject to theminimum wage requirements under the FLSA."

1. The Six-Factor Test

Based primarily upon the Supreme Court's decision in PortlandTerminal, the WHD established a six-factor test to determine whether anindividual is an employee for purposes of the FLSA.^" If the following sixcriteria are satisfied, the trainee is not an employee within the meaning ofthe FLSA, and therefore, not entitled to the minimum wage requirements:

1. The training, even though it includes actual operation of thefacilities of the employer, is similar to that which would be givenin a vocational school;

2. The training is for the benefit of the trainees or students;

3. The trainees do not displace regular employees, but work tmdertheir close observation;

4. The employer that provides the training derives no immediateadvantage from the activities of the trainees, and on occasion theemployer's operations may actually be impeded;

5. The trainees are not necessarily entitled to a job at the conclusionof the training period;

6. The employer and the trainee understand that the trainees are notentitled to wages for the time spent in training.^^

According to several WHD opinion letters that specifically address theapplicability of the six-factor test to student intemships, all criteria in theabove test must be satisfied for intems to qualify as trainees rather thanemployees.^* Intems considered to be employees rather than trainees.

53. Id. at 153.54. See Yamada, supra note 7, at 227-28.55. WAGE & HOUR DIV., DEP'T OF LABOR, FIELD OPERATIONS HANDBOOK § lO(b)(ll)

(1993) [hereinafter FIELD OPERATIONS HANDBOOK], available athttp://www.dol.gov/whd/FOH/FOH_Chl0.pdf; see also FLSA Status of Student Intems, Wage &Hour Op. Ltr. No. FLSA2004-5NA (Dep't of Labor May 17, 2004),http://www.dol.gov/whd/opinion/FLSANA/2004/2004_05_17_05FLSANA intemship.htm[hereinafter FLSA Status of Student Intems].

56. See, e.g., FLSA Status of Student Interns, supra note 55 (inquiring whether an intemshipprogram teaching "marketing, promotion, and statistical analysis to the students in a real worldsetting" created an employer-employee relationship under the FLSA); Wage & Hour Op. Ltr. No.FLSA2006-12 (Dep't of Labor Apr. 6, 2006), available athttp://www.doI.gov/whd/opinion/FLSA/2006/2006_04_06_I2_FLSA.htm (inquiring whether a


however, "must be paid at least the minimum wage and overtimecompensation for any hours worked over 40 in a work week."'^ In otherwords, unpaid intemships, specifically in the for-profit sector, must satisfyall six criteria to avoid violating the minimum wage requirements under theFLSA.''

2. Federal Court Decisions

Federal courts have never specifically addressed whether unpaidintems qualify as employees under the FLSA; however, courts have miedon cases conceming trainee programs, which involve scenarios akin tounpaid intemships." Although most courts still refer to the WHD's six-factor test, there is no majority approach that all circuit courts use todetermine an individual's employment status.*" In fact, many ofthe courtstend to disagree with each other as well as the WHD in their application ofthe six-factor test.*' While some courts choose to follow the WHD'sapproach of applying the six criteria as an all-or-nothing test,*^ severalcourts apply their own version ofthe test and do not necessarily incorporateall the factors equally.*^

university program that gives students the opportunity to spend one week "shadowing" anemployee at a sponsoring employer was subject to the FLSA); Wage & Hour Op. Ltr. No.FLSA2002-8 (Dep't of Labor Sept. 5, 2002), available athttp://www.dol.gov/whd/opinion/FLSA/2002/2002 09_05 8_FLSA.htm (inquiring whether asummer job training program for local youths who "will perform entry-level administrative orclerical tasks for local businesses, as well as cleaning, painting, removing trash, and performinglike chores to help their elderly and disabled neighbors" was legal under the FLSA). See alsoFIELD OPERATIONS HANDBOOK, supra note 55.

57. CoWyer, supra xioXsAX.58. See PERLIN, supra note 10, at 66 ("If an intemship meets all six criteria, that makes it a

traineeship for which wages are not required, but if even one ofthe six criteria is not the intemshipis legally considered a job, bringing the benefits of the minimum wage, overtime pay, andassociated rights."); see also Lynne M. Hook, Applying the Department of Labor's Six Criteria forUnpaid Internships, L.A. LAW., July-Aug. 2011, at 12-13, available athttp://wvw.lacba.org/Files/LAL/Vol34No5/2829.pdf; Tripp, supra note 42 (noting that thestandard must be met, even in cases where the intem is receiving school credit).

59. See Yamada, supra note 7, at 230-31 ; Curiale, supra note 5, at 1542.60. See Curiale, supra note 5, at 1543.61. See, e.g., id. ; Yamada, supra note 7, at 230.62. See, e.g., Atkins v. Gen. Motors Corp., 701 F.2d 1124, 1127-28 (5th Cir. 1983); Donovan

V. Am. Airlines, Inc., 686 F.2d 267, 273 n.7 (5th Cir. 1982); Marshall v. Baptist Hosp , Inc 668F.2d 234, 238 (6th Cir. 1981).

63. See Curiale, supra note 5, at 1543-44; Collyer, supra note 41.


In Reich v. Parker Fire Protection District, *" for example, the TenthCircuit rejected the WHD's all-or-nothing approach;*^ instead, the courtapplied a "totality of the circumstances" test to determine whether thefirefighter trainees were employees or trainees under the FLSA during thetime they spent training at the fire-fighting academy.*^ The court agreedwith the defendant's argument that determination of an employee's status"should not tum on the presence or absence of one factor in the equation."^'Even though not all six factors were satisfied, the court held that thefirefighter trainees were not employees under the FLSA because a "singlefactor cannot carry the entire weight of an inquiry into the totality of thecircumstances."**

In contrast to the Tenth Circuit's approach, other courts have appliedonly certain factors of the six-factor test to determine an individual'semployment status under the FLSA.^' In McLaughlin v. Ensley,^° forexample, the Fourth Circuit relied heavily on the beneficiary element todetermine whether an individual is subject to the FLSA.^' The courtexplained that "the proper inquiry was whether the employer or the traineesprincipally benefited from the weeklong orientation arrangement."'^Because the trainees' tasks actually helped the employer distribute his snackfoods, it was evident that the employer was benefiting primarily from thearrangement.'^ Accordingly, the court held that the trainees whoparticipated in the program were entitled to receive minimum wages.'"

64. 992 F.2d 1023 (10th Cir. 1993).65. / ¿ a t 1026-27.66. Wat 1025-27.67. Id. at 1026.68. « .a t 1029.69. See, e.g.. Bailey v. Pilots' Ass'n for the Bay & River Delaware, 406 F. Supp. 1302, 1306

(E.D. Pa. 1976) (noting that the "economic reality" of the employment relationship isdeterminative); Wirtz v. Wardlaw, 339 F.2d 785, 787-88 (4th Cir. 1964) (placing greater emphasison the employer benefit factor); McLaughlin v. Ensley, 877 F.2d 1207, 1209 n.2 (4th Cir. 1989)(refusing to rely on WHD's formal six-part test and looking to precedent instead).

70. McLaughlin, 877 F.2d 1207.71. M at 1209.72. Id.73. Ma t 1210.74. Id.


B. The Department of Labor's Recent Developments

Due to the ambiguity surrounding the legality of intemships, in April2010, the DOL released a new fact sheet in an attempt to clarify theguidelines conceming intemship programs under the FLSA.'' These so-called clarifying guidelines, however, simply reiterated the WHD's six-factor test by applying the criteria specifically to unpaid intemships.'* Aswith traineeships, intemships in the for-profit sector that fail to meet all sixcriteria will be viewed as employment, and therefore, subject to the FLSA'sminimum wage requirements."

In hopes of clarifying these six criteria in the context of unpaidintemships, the fact sheet includes additional informafion on some of themost commonly discussed factors.'^ For instance, according to the WHD,unpaid internships violate the FLSA when they are used as trial periods forindividuals seeking a paid position at the end of the intemship program."The intem will be considered an employee under the FLSA when the"intem is placed with the employer for a trial period with the expectationthat he or she will then be hired on a permanent basis."'" To avoid thesetypes of violafions, the WHD recommends that employers structure theirintemship programs around "a classroom or academic experience asopposed to the employer's actual operations."" In fact, as the WHDexplained, an intemship, where "the intem performs no or minimalwork. . . is more likely to be viewed as a bona fide educationalexperience."''^

The fact sheet further explains that when intems are engaged in "theoperations of the employer or are performing productive work," theemployer benefits from the intem's work and is, therefore, subject to theFLSA.'^ Even though the intem, under those circumstances, "may bereceiving some benefits in the form of a new skill or improved workhabits," that is not sufficient enough to exclude the employer from the

75. See FACT SHEET #71, supra note 29 ("The fact sheet provides general information to helpdetermine whether intems must be paid minimum wage and overtime under the FLSA for servicesthat they provide to 'for-profit' private sector employers.").

76. Id11. Id.78. Id.79. Id at2.80. Id.81. Id. 182. Id.83. Id.


minimum wage and overtime requirements.^'' In other words, an unpaidintemship whereby the "intem does not perform the routine work of thebusiness on a regular and recurring basis, and the business is not dependentupon the work of the intem" is less likely to violate the FLSA's minimumwage requirements.^'

II. PROBLEMS WITH THE CURRENT REGULATION GOVERNING UNPAID

INTERNSHIPS

At present, so many intemships are likely in violation of the lawbecause they simply cannot satisfy a standard that dates back more thansixty years.^* Because the standard goveming the legality of unpaidintemships consistently fails to accommodate more recent economicrealities, it becomes increasingly difficult for the even the "good"intemships to pass the test.̂ ^ While some employers clearly violate theFLSA by using unpaid intems as a source of free labor, there are manyemployers offering unpaid intemships that provide invaluable educationaland professional experiences that should not be deemed in violation of thelaw.̂ ^ Although these "good" intemships are extremely beneficial, many arestill deemed to violate the FLSA because they fail to meet all six factors ofthe WHD's test for exemption under the FLSA.*' If an intemship fails tomeet any one of the six criteria, "it cannot escape a finding of employeestatus even if the intemship program is 'academically oriented for thebenefit ofthe students.'"'" In essence, unless we reform the standards andregulations goveming unpaid intemships, the extremely valuableintemships, which are non-exploitative and highly educational in nature,will be considered illegal solely for failure to conform to antiquated criteria.

84. Id.85. Id86. See Greenhouse, supra note 8 (noting that many employers believe that the six criteria

goveming unpaid intemships need to be updated because the test is based on a 1947 SupremeCourt decision, which was determined at a time "when many apprenticeships were for blue-collarproduction work").

87. See id.88. See Questioning the Ethics of Unpaid Intemships, supra note 1.89. Results from a 2010 NACE survey revealed that many college respondents believe "that

the DOL should update the standards that apply to evaluating the legality of an unpaid intemship"because many of these regulations are simply outdated. NACE, supra note 20, at 5; see alsoQuestioning the Ethics of Unpaid Internships, supra note 1.

90. Yamada, supra note 7, at 234.


The WHD's six-factor test is debatable for several reasons;^' however,given the present economic environment, the following three criteria areparticularly problematic: 1) the employer must receive no immediateadvantage fi-om the intem's activities; 2) the intem is not entitled to a job;and 3) intemships must contain an educational component that is similar totraining given in an educational environment.

A. No Immediate Advantage

By failing to update the standards goveming unpaid intemships,regulators are effectively requiring corporations to eliminate any or all ofthe potential value that can be gleaned through these experiences. Forexample, the fourth criterion under the six-factor test that requires that theemployer receive no immediate advantage from the intem's activities issimply nonsensical in a capitalistic environment.'^ In actuality, "thebusiness case for employers to host intems completely relies on the fact thatthe organization will receive some sort of overt benefit."'^ As a result ofthis blatant inconsistency, many college respondents who completed the2010 NACE survey felt that this factor, in particular, "needed immediaterevision to recognize the reality of what makes the intemship experiencevaluable for both the student and the employer."^"

Intemships are valuable because they afford individuals the opportunityto gain real work experience.'' A tmly educational experience provides theintem with the resources to engage in hands-on work-related activities.'* Infact, the "tQp" intemships are rated highly for reasons such as valuablework experience, networking, and "behind-the-scenes exposure."'^ Forexample, ari MBA graduate who intemed for sixteen weeks at a custom

91. See, e.g., Curiale, 5M/)ra note 5, at 1546.92. See NACE, supra note 20, at 5 ("A number of respondents thought that the regulation

that 'unpaid intemships provide no immediate benefit to the employer,' was in the words of onerespondent, 'ludicrous.'").

93. INTERNBRIDGE, lNC.,5«/)ranote4, at 11.

94. NACE, supra note 20, at 3, 5 ("Nearly two-thirds (63.4 percent) of college respondentsdisagreed withi this standard (19.8 percent strongly disagreed), and 52.8 percent of employerrespondents disagreed (11.3 percent strongly).").

95. See Gr'egory, supra note 3, at 241.96. INTERN BRIDGE, INC., supra note 4, at 9.97. Ortnerj supra note 18, at 2621; see also INTERN BRIDGE, INC., supra note 4, at 9 (noting

that the top seven motivational factors for students who pursue intemships are all "experientialbased"). I


clothing company considered his experience invaluable because he "spentabout 10 hours a week doing tasks like writing articles for the company'sfashion guide."'^ As a matter of fact, these specific types of taskseventually enabled this graduate to launch his own business as a styleconsultant.

The WHD's recommendation, however, that intems perform "no orminimal work" is entirely antithetical to the experiential value inherent inthe intemship process.'"" Although the WHD allows employers to offer jobshadowing opportunities,'"' an intemship is simply not as beneficial to anintem when he or she is prohibited from engaging hands-on in work relatedactivities.'"^ By providing an intem with work that provides little or novalue to the employer to ensure that the employer gains no advantage fromthese activities, the employer effectively eliminates the educationalcomponent, which ultimately renders the experience worthless.'"'' If thepurpose of an intemship is to mimic a real work experience, then theemployer will undoubtedly gain some advantage from the intem's work.'"'*

While many employment lawyers agree that the intemship experienceis for the benefit of the intem, they believe that it is a bit of a stretch toexpect a company to provide an intemship and receive absolutely no benefitwhatsoever in retum.'"' One employment lawyer noted that, in herexperience, "many employers agreed to hire intems because there is astrong mutual advantage to both worker and the employer."'"* Senator JohnKerry captured this relationship perfectly when he said: "Be it throughintemships, fellowships, or co-op programs, this symbiotic relationship

98. Tahniincioglu, supra note 2, at 64.99. Id.

100. See Joseph E. Aoun, Protect Unpaid Intemships, INSIDE HIGHER ED (July 13, 2010 3:00AM), http://www.insidehighered.com/views/2010/07/13/aoun. •

101. See FACT SHEET #71, supra note 29, at 2.102. See Aoun, supra note 100 (describing job shadowing as a "pale imitation of tme

experiential teaming"); see also INTERN BRIDGE, INC., supra note 4, at 9 (noting that the numberone motivational factor for students who pursue intemships is "[t]o gain hands on experience in[their] field").

103. See Naresh Vissa, Opinion: Unpaid Intemships Are A Bad Investment, USA TODAYCOLLEGE (June 3, 2011), http://www.usatodayeducate.com/staging/index.php/blog/opinion-unpaid-intemships-are-a-bad-investment (quoting one employer who suggests that in order toconform to the law as it stands now, employers "would have to create work that is useless to[them] if [they] choose not to pay [intems]").

104. See Alison Damast, Should You Pay Your Student Intem?, BLOOMBERG BUSINESSWEEK(Apr. 16, 2008 3:00 PM), http://www.businessweek.com/magazine/content/08_64/s0804026863534.htm.

105. Questioning the Ethics of Unpaid Intemships, supra note \.106. See Greenhouse, 5î/pra note 8.

296 ' SOUTHWESTERN LAW REVIEW [Vol.41

helps foster economic development and a competitive workforce."'"' This"symbiotic relationship" ultimately creates a "win-win situation" for boththe company and the intem.'°^ Thus, if a company derives no benefit fromthe intem, it will have absolutely no incentive to offer intemship

• • 109

Opportunities.

B. No Job Entitlement

The WHD's requirement that the intem not be entitled to a job at theend of the intemship contradicts employers' expectations in today's jobmarket. In reality, many unpaid intems today "rely heavily on theirintemships to promote their career ambitions.""" According to a NACEsurvey, "[seventy-five] percent of employers prefer job candidates withrelevant work experience."'" More significant, however, is that more thanninety percent of those employers prefer to hire intems who havepreviously worked for their organization."^ Because employers are muchmore likely to hire individuals who possess at least some experience in thefield, these unpaid intemships are critical stepping stones for collegegraduates and graduate students who have limited professionalexperience."^ According to Ross Periin, an expert in the field of unpaidintemships, "[ijintemships have become a gateway into the white-collar

107. Aoun,iMpra note 100.108. See Jamie Herzlich, Intemship Program Should be a Win-Win Situation, CHI. TRIB., May

12, 2008, http://artieles.chicagotribune.com/2008-05-12/business/0805100161_lintemship-dowling-coUege-student.

109. See NACE, supra note 20, at 5; .see also Aoun, supra note 100 ("With experientialleaming on the rise, through co-op, intemships and other approaches, the country cannot afford tocreate disincentives for employers to play a valuable role in the educational enterprise.").

110. Ortner, 5Mpra note 18, at 2621.111. Aoun, supra note 100; see also Hook, supra note 58, at 13 (noting that among the

students surveyed by the National Association of Colleges and Employers, 42 percent of thegraduates with intemship experience who applied for jobs received offers compared with only 30pereent of students who had no intemship experience).

112. See Aoun, supra note 100; ^ee also Stossel, Pro-choiee on Intemships, supra note 32("Statistics froni 2007/2008 show that two out of three students who secure[ed] intemships [were]offered full-time employment from the very company that gave them the intemship.").

113. See Ortner, supra note 18, at 2617; see also PERLIN, supra note 10, at 28("[O]rganizations and businesses in the intemship space boast that employers regularly listintemship experience as a top hiring criterion-50 percent if new eoUege graduate hires came outintemship programs at the same firm, . . . while an additional 40 percent had intemed at otherfirms.").


work force. . . [e]mployers increasingly want experience for entry-leveljobs and, many students see the only way to get that is through unpaidintemships.""" For example, a survey of law school graduates found thatthe students who gained experience in the legal field during law schoolwere in a much better position to obtain full-time employment in the legalfield after graduation."^

As the competition for job opportunities escalates, intemshipsincreasingly play a more critical role."* According to the assistant directorof intemships at UCLA, students must "resolve the fact that they have to doan intemship. It's not a choice anymore."'" Unfortunately, straight A'sfrom a prestigious university no longer suffice to make a student standout.'" Instead, employers look at how many intemships a student hascompleted."' Kate Wendleton, president of a national career-counselingfirm, blatantly stated: "[i]f you graduate from college and you've never hadan intemship or worked in your field, nobody's going to touch you."'^"Employers "want the [students] that have gone above and beyond theclassroom"'^' because "[t]hat's the only experience you're getting, with areal job . . . [e]verything else is book knowledge and school projects."'^^ Inreality, "employers base interviewing decisions on the names they see onresumes. If they see big names, it mattets. It's like saying you went toHarvard University, Stanford or Wharton."'^^

In certain industries, such as entertainment and advertising, unpaidintemships are considered an "institutional rite of passage."'^" Because

114. Greenhouse, supra note 8.115. Ortner, supra note 18, at 2617.116. Diane E. Lewis, Internships Serve as Crucial Career Launch Pad, BOSTONWORKS.COM

(Apr. 13, 2003), http://www.boston.com/jobs/globe/articles/041303 intem.html ("Whether you'rea college freshman or a senior, intemships or part-time work in the field of your choice are evenmore prized in a tough economy. Savvy college students view that as a way to build social capitalin the workplace that pays off in the future with full-time jobs or interviews.").

117. Andrea Perera, Paying Dues in Intemships, L.A. TIMES, Apr. 22, 2002, at B4.118. Id at 2.119. Id at3.120. Lewis, .îMp/-a note 116.121. Id122. Perera, supra note 117, at 3; jee also CERI Thought Piece: Intemships as High Stakes

Events, COLLEGIATE EMP'T RES. INST., MiCH. STATE UNIV. (Jan. 1, 2011), available athttp://www.ceri.msu.edu/wp-content/uploads/2010/01/High-Stakes-Intemships.pdf (noting thatextracurricular activities on campus cannot be substituted directly for an intemship experiencebecause students engaging in those type of activities do not develop the required skills andcompetencies that employers now expect in the workplace).

123. Lewis, s«pra note 116.124. Tripp, supra note 42; see also Questioning the Ethics Of Unpaid Intemships, supra note

1.


these practices are so ingrained in the industry, unpaid intemships haveultimately become a prerequisite to any form of paid employment.'^^ Infact, many companies believe that "simply hiring new college graduateswithout any experience with the company opens the company to significantrisk."'^* Ail intemship, therefore, becomes a strategic tool that companiesuse to maintain productivity within the workforce.'^^ Despite the WHD'srules that aii unpaid intemship "should not be used by the employer as atrial period for individuals seeking employment,"'^^ experts insist that"intemships are increasingly 'powerful conduit[s] to the best jobs.'"'^'

C An Academic Component

According to the WHD, intemships must contain an educationalcomponent that is similar to training given in an educationalenvironment.'^" However, most unpaid intemships fail to meet thiscriterion because the intemship is not inextricably linked to academia.'^'Many respondents ofthe 2010 NACE survey believed that this factor, inparticular, needed updating because it is extremely burdensome "to providean academic connection for activities that do not have any academicvalue."'''^ Although universities have offered academic credit to helplegitimize thiese intemships in the eyes ofthe DOL,'" school credit is not asolution.'^'' Even though some states require intems to receive collegecredit in lieu of compensation, federal regulators have explicitly stated that"receiving college credit does not necessarily free companies from paying

125. See Questioning the Ethics of Unpaid Intemships, supra note 1; Ortner, supra note 18, at2617. i

126. CERI Thought Piece, supra note 122 ("[WJhile leaming complex jobs on-the-fly hasbecome common in many organizations, this kind of discontinuous transition carries significantrisks of increased mistakes, reduced efficiency, and missed opportunities.").

127. Seeid.^128. FACT SHEET #71, supra note 29, at 2.129. Ortner, íMpra note 18, at 2618.130. FACT SHEET #71, i«pra note 29. •131. &e NACE, .SMpra note 20, at 5132. Id133. Id.; see also Questioning the Ethics of Unpaid Intemships, supra note 1 (noting that a

number of employers also require their intems to obtain academic credit as a means of making theintemship appear more educational).

134. See Greenhouse, supra note 8; PERLIN, supra note 10, at 84.

2012] THE OB AMA "CRACKDOWN" 299

intems."'^^ The bottom line is that companies are not educationalinstitutions, and they cannot be expected to transform for purposes oflegitimizing their intemship programs.

Many college students believe that there should be no formal educationor academic credit associated with intemships because "the workexperience alone is an educational component... ."'̂ * Even thoughintemships do not physically take place in an academic environment,educational experiences are not necessarily restricted to classroomsettings.'" In fact, for many intems "the 'payoff comes in the form ofvaluable [work] experience gained by working in a professionalenvironment."'^^ When students participate in well-developed intemshipprograms, they have the opportunity to develop important professionalskills such as confidence, poise, adaptability, and the ability to workcollaboratively, all of which provide cmcial knowledge that is notnecessarily taught in classroom environments.'^' Unlike students in aclassroom, intems participating in "good" intemships have the opportunityto gain real world experience by engaging in hands-on work-relatedactivities, exploring new industries and organizations, and leaming how tomake professional contacts.'""

Furthermore, intemships are especially educational for studentsundecided about their career path because intemships "allow intems to gaininsight into different companies and perhaps make better career choices as aresult."'"' According to Mary Scott, president of a consulting companyspecializing in worker recmitment and retention, "[i]ntemships are to full-time jobs as dating is to marriage . . . . Students want to examine all theiroptions before making a commitment."'"^ For example, one collegefreshman justified working as an unpaid intem solely for purposes ofprofessional exposure: "experience is the best thing for me . . . . I appreciatethat I can get involved in a field I might enjoy . . . [i]t's a way to be in that

135. Greenhouse, supra note 8; see also PERLIN, supra note 10, at 84 ("Academic credit alonedoes not guarantee that the employer is in compliance with the six criteria of the Fair LaborStandards Act.").

136. NACE, 5wpra note 20, at 2.137. See W. at 2, 3.138. Ortner, supra note 18, at 2618; ^ee also Aoun, supra note 100 ("Educators are

increasingly realizing that the integration of study and practice is a more powerñil way to leam.").139. See Aoun, supra note 100 (noting that the type of knowledge gained through an

intemship will serve students for a lifetime).140. See, INTERN BRIDGE, supra note 4, at 9 (providing a chart of motivational factors for

students who pursue intemships); ^ee also Perera, supra note 117.141. Curiale, supra note 5.142. Altschuler, supra note 2.


arena, to be in that environment - just to see if it's something IEven though many unpaid intemships do not contain an academicconnection to an academic environment, the WHD's current regulation failsto recognize that the work experience, in and of itself, is tmly

'**educational.''*'*

III. AN UPDATED STANDARD

To effectively regulate unpaid intemships without eradicating the entireintemship market, the DOL must update the mies goveming unpaidintemships. Although there are some intemships that clearly violate theFLSA and exploit intems as free labor,''*' there are also many unpaidintemships that offer invaluable educational and professionalexperiences.''** While there is clearly a distinction between these two typesof experiences, the WHD's current standard is not designed to distinguishbetween the "good" and the "bad" unpaid intemships.'"*^

Rather than implement a nationwide "crackdown" that increasesenforcement of ineffective regulation, the Obama administration shouldwork with the DOL to update these laws in accordance with the demands oftoday's economy. However, to effectively update the legal standard, theDOL must have an in-depth understanding ofthe dynamics among students,employers and academic institutions. A standard that encompasses theneeds of all three above- mentioned parties and allocates responsibilitiesaccordingly will be more effective in regulating the exploitation of "bad"intemships without dismpting the "good" intemships.

143. Peter W. Fulham, Unpaid Interns and Labor Law: Gaining Experience, Enduring Abuse,POLITICS DAILY (May, 5, 2010), http://www.politicsdaily.com/2010/05/12/unpaid-intems-labor-laws-students-experience-abuse/.

144. See FACT SHEET #71, supra note 29.145. See Greenhouse, supra note 8 (noting that many students reported having intemships that

involved "noneducational menial work").146. See id. (referring to intemships as "valuable steppingstones" that provide "experience for

entry-level jobs"); see also INTERN BRIDGE, INC., supra note 4, at 9 (noting that studentsprimarily pursue intemships to gain "real world experience" and "build their networks").

147. The current WHD standard makes no distinction between unpaid intemships that merelyserve employers as a source of free labor and those that provide invaluable educational andprofessional experiences. See FACT SHEET #11, supra note 29.


A. Students

While an intem's realistic evaluation of his or her experience mightappear to be the most effective method of regulating the exploitation ofunpaid intemships, it may be the most impractical solution since moststudents will not speak out against their host organization.'"^ Even ifintems have negative experiences while inteming, they are often afraid tofile complaints because many fear that they "will become known as thetroublemakers in their chosen field, endangering their chances with apotential future employer."'"' According to employment lawyer, MichaelTracy, the problem revolves around the fact that there are "willingvictims."'^" In light of the fact that students constantly worry aboutoffending their employers, getting fired or creating a bad name forthemselves, it is unrealistic to rely on the students to step forward.'^'Without confidentiality safeguards in place, "one cannot expect collegestudents to assert their rights unilaterally against a corporation."'^^

While some intems may provide feedback about their experiences,specifically about which intemships are relevant or useless, there remainslittle discussion about whether many of these unpaid intemships are, in fact,legal in the first place.'^^ This lack of discussion conceming the legality ofintemships is due, in part, to the unfamiliarity of these laws.'^" In reality, asignificant majority of young, inexperienced college students may not havethe experience or the maturity to determine whether they may be entitled tocompensation for their specific intemship.''^ Before encouraging intems tospeak out, these individuals must be knowledgeable about the lawsgoveming unpaid intemships.'^* Academic institutions, in particular, which

148. See Greenhouse, supra note 8.149. Id.\ see also Yamada, supra note 7, at 232 ("[S]ome students at least may suspect that

they have a legal right to compensation for their intemship work, but they opt not to make an issueof it lest they jeopardize the benefits and future opportunities implicitly promised in retum fortheir free labor.").

150. PERLIN, supra note 10, at 63.151. See id. ("Yesterday's intems need their former employees as references or contacts, and

today's intems trade their half-understood rights for a resume boost."); Questioning the Ethics ofUnpaid Intemships, supra note I.

152. Gregory, supra note 3, at 262.153. See PERLIN, supra note 10, at 63 (noting that despite the popularity surrounding

intemships, no one mentions the laws goveming these positions or takes them very seriously).154. See id. ("The law is not widely known."); see also Gregory, supra note 3, at 262 ("Most

college students probably do not know their rights under the law.").155. See Yamada, supra note 7 at 232.156. See id.


encourage students to participate in intemships, should educate theirstudents before the intemship begins.'" A recent policy memorandum bythe Economic Policy Institute, for example, recommended that thegovemment "work closely with universities and educationaF institutions toraise awareness of rights of student workers, collaborating closely withcareer and intemship offices present on individual campuses.""' Once thestudent becomes familiar with the law, he or she is in a better position toexercise rights and report any problematic experiences.'^^ Because studentsare more likely to express potential concems to their schools rather than tolaw enforcement personnel, academic institutions must ensure that studentshave access to confidential resources to voice any possible concems.'*"

B. Employers

With unemployment at a high rate, it is critical that employers maintainan incentive to continue to offer unpaid intemships.'*' In other words, theremust be some form of mutual advantage between the employer and theintem.'*^ Rather than benefitting only one party, "[the] intemshipexperience might appropriately be referred to as a 'synergy' with the intemeaming 'practical knowledge about the current major or career interest' andthe company receiving in exchange a means of improving its 'bottomline.'"'*^ One employment lawyer suggested that there should be a "mutualbenefit test" to determine whether both parties are benefitting equally.'*" Inreality, employers already know how to "craft positions that add value onboth sides of the equation" because they do it every day with respect to

157. See Gregory, supra note 3, at 262.158. KATHRYN ANNE EDWARDS & ALEXANDER HERTEL-FERNANDEZ, ECON. POLICY INST.,

NOT-SO-EQUAL PROTECTION: REFORMING THE REGULATION OF STUDENT INTERNSHIPS 6

(2010), available at http://www.epi.org/publication/pml60/.159. In addition to students, post-graduates and young professionals participating in unpaid

intemships should also be aware of these laws. Familiarity with these rights might compel intemsto take the initiative and ask their organizations for more challenging assignments to ensure thatthey are benefiting from the intemship at least as much as their organization. See CERI ThoughtPiece, supra note 113.

160. See Gregory, î«pro note 3, at 262.161. See NACE, supra note 20.162. Greenhouse, íMjora note 8.163. Ortner, supra note 18, at 2621.164. See Greenhouse, supra note 8.


their full-time employees.'*^ Employers, for example, might provide"intemship maps that lay out the tasks that will be undertaken during theintemships and, more importantly the skills and abilities that will bedeveloped during the time with the organization."'** Organizations thatdevelop intemship programs in advance are better equipped to engage theirintems in productive work assignments.'*^ Simply put, if employersimplemented a more stmctured system with regard to their intemshipprograms, then both parties would likely benefit more equally.'*^

Rather than preventing the employer from receiving any advantage, theDOL should implement regulations that forbid employers from benefittingmore than the intem.'*' For example, "when an intem spends more timeperforming work that provides an economic benefit to the employer thanparticipating in formal training programs" an employment relationship mustbe presumed.'^" To ensure that regulation does not inhibit the opportunityto gain valuable work experience, an employer must be entitled to benefitfrom the intem's' activities; however, regulators must establish specificlimitations to ensure that students benefit at least as much their employersdo."'

C. Academic Institutions

While academic credit may appear to legitimize unpaid intemships, thisrequirement is often an unreliable safeguard against exploitation."^ For-credit intemships have the potential to offer positive experiences; however,academic institutions must provide more than just a few simple units to lend

165. Ross Perlin, What Unpaid Intemships Say About Your Company, HBR BLOG NETWORK(Apr. 19, 2010, 9:54 AM), http:/^logs.hbr.org/cs/2010/04/unpaid_intems_heres_what they.html.

166. CERI Thought Piece, supra note 122; ^ee also Aoun, supra note 100 ("[E]mployersshould outline the leaming outcomes students are expected to achieve upon completing theirexperiences.").

167. See CERI Thought Piece, supra note 122. For example, organizations that are betterprepared can assign their intems to individual mentors or supervisor, which might be another wayto improve intemship experiences. See id. In other words, "[t]he lack of forethought instmcturing an organization's intemship program is a recipe for failure." Id.

168. See id.169. See Yamada, supra note 7, at 235.170. Id. at 235 (citing Walling v. Portland Terminal Co., 330 U.S. 148, 152 (1947)).171. See ;Í/. at 234-35.172. See CERI Thought Piece, supra note 122.


credibility to the experience.'" Because schools tend to act as primarygatekeepers, it is reasonable to assume that it is their responsibility toimplement the appropriate monitoring mechanisms to protect their studentsfrom exploitative environments.'^" As a result, colleges and universitiesneed to be more involved in the preliminary screening of these placementsas well as in the periodic monitoring of the student intem workenvironment."^

While some schools carefully manage their intemship programs, anumber of institutions fail to provide the proper oversight necessary toensure a quality experience.'^* In fact, a NACE survey consisting of morethan 700 colleges revealed that ninety five percent of the respondentsallowed the posting of unpaid intemships on college campuses andwebsites.'^^ More significantly, however, is the fact that among thosecolleges that allowed these postings, only thirty percent required students toobtain some form of academic credit associated with these unpaidpositions.'^^ In other words, a majority of colleges are publicizing unpaidintemship opportunities to their students without any evaluation as towhether these placements will offer legitimate, meaningful experiences.'^'

By failing to screen these placements from the outset, colleges anduniversities are effectively facilitating access to potentially unfavorableintemships.'^" As gatekeepers in this process, schools need to be morevigilant about the intemship positions that they advertise on their websitesand on their campuses.'^' Academic institutions, for example, might easilyrequire employers to provide detailed descriptions outlining the intemshippositions prior to posting a placement online.'^^ Additionally, colleges and

173. Id. ("Credits for intemships have to be carefully thought through so that we are doingwhat is right for the students.").

174. See NACE, supra note 20 (finding that 66.9 percent of college respondents and 54.4percent of employer respondents preferred having the schools act as gatekeepers rather than thefederal govemment).

175. See Gregory, supra note 3, at 262 ("The schools should continually update and evaluatewhat the students are doing at work and investigate possible problems.").

176. See Questioning the Ethics of Unpaid Internships, supra note 1 ("Some colleges seemhappy to give c r e d i t . . . for intemships because they'll get paid maybe three, four, [five thousand]for these credits when they don't even have to provide a professor . . . to teach those credits. Butother schools really think that employers are taking advantage or trying to pull a fast one, andthey're very careful about granting course c red i t . . . for some intemships.").

177. See NACE, supra note 20, at 2.178. See id179. See PERLIN, supra note 10, at 86.180. See/i/. at 85-86.181. See ic/. at 86-87.182. See Aoun, supra note 100.


universities could implement certain criteria that provide thé employer withclarification of their expectations regarding unpaid intemships.Developing such criteria will hopefully weed out many ofthe organizationsunwilling to comply with these specified conditions.'̂ "*

In addition to preliminary screening, academic institutions need to bemore engaged throughout the intemship period to ensure that the experienceis, indeed, a valuable one.'^' Rather than wait for the student's evaluation,schools must be responsible for actively monitoring these intemships.'^*This type of increased scmtiny, however, can be challenging because itcalls for more cooperation on behalf of everyone involved.'^^ In addition tothe campus career center, the faculty, students, and intem supervisors are allcritical to the evaluation process.'^^

Many colleges use faculty supervision and student written assignmentsto help gauge whether employers are providing legitimate educationalexperiences.'^' While this feedback can be useful, these assignments aregenerally tumed in at the end ofthe intemship period."" This practice oftendenotes that minimal supervision was offered during the actualintemship.'" Instead, faculty members need to take a more active role asadvisors and require students to engage in various refiection exercisesthroughout the intemship process."'^ Although these ongoing refiectionassignments can be a bit more time-consuming for both students andfaculty, refiective practices are extremely valuable because they can helpstudents understand the skills and abilities they are developing, and moreimportantly, provide faculty advisors insight into the types of tasks beingperformed."^ In addition to student feedback, however, schools should also

183. See Herzlich, supra note 108 (noting that many colleges and universities developguidelines that they would like employers to follow).

184. See/¿185. See CERI Thought Piece, supra note 122.186. See Aoun, supra note 100.187. See CERI Thought Piece, supra note 122.188. See¡¿189. See NACE, supra note 20, at 2 ("Among the schools that do require credit, the most

frequently used academic component is faculty supervision of the intemship along with writtenassignments (84.6 percent require faculty supervision and 74.7 percent insist on writtenassignments).").

190. See CERI Thought Piece, supra note 122.191. See id. (explaining that assignments which are completed after the student retums to

campus can be "superficial" unless the supervising faculty member provides extensive feedback).192. See id. (noting that reflection during the intemship experience will allow faculty advisors

to assist intems with any potential problems that may arise).193. See;¿


request feedback from intem supervisors."" A supervisor is often"identified as the lynchpin for a successful intemship experience," and hisor her feedback can "help with developing transferable or boundarycrossing skills and abilities.""^

Developing a valuable intemship program ultimately involves a strongand reliable network of employers that schools can depend upon to providetheir students with quality experiences."* The initial process involved inbuilding such a network, however, is challenging because academicinstitutions have to invest a great deal of time, money, and effort intoestablishing the appropriate monitoring procedures. Because many collegesand universities may not have the financial capability to implement suchprocedures, the DOL needs to work with these institutions to help obtain thenecessary funds to develop stronger intemship programs."' As soon as theWHD partners with these educational institutions, these schools, whichserve as the primary gatekeepers, will have more capacity to activelymonitor and evaluate intemship placements, and more importantly, begindeveloping a network of tmsted employers to ensure students receive aninvaluable educational and professional experience."^

IV. CONCLUSION

As unemployment rates escalate, unpaid intemship opportunitiesbecome more critical than ever before. For those people without any viablejob prospects, intemships are the best availabile altemative. Althoughunpaid intemships cannot guarantee employment,"' students, graduates,and even middle-aged professionals "take the positions . . . because theysee the door to the professional market closing and want to get their foot in

194. See id.195. Id.: see also Allie Grasgreen, Intern Nation, INSIDE HIGHER ED (Apr. 15, 2011, 3:00

AM),http://www.insidehighered.com/news/2011/04/15/unpaid intemships_stir_ethical_and_legal_debate_at_colleges_and_businesses (noting that Xavier University, for example, monitors its for-creditintemship program by having their faculty coordinators do site visits and requiring both the intemand his or her supervisor to submit evaluations).

196. See Aoun, supra note 100 ("Through this network, institutions cultivate partnerships andwork closely with students to find the best fit for both sides.").

197. See Gregory, supra note 3, at 262 ("Since no one can realistically expect the colleges todo this all unilaterally, the Wage and Hour division of the United States Department of Laborneeds to become much more involved, in frequent preventative contact with the universities toinvestigate potential problems."); NACE, supra note 18, at 4-5.

198. See Aotin, supra note 100.199. Gregory, supra note 3, at 241.

2012] . THE OBAMA "CRACKDOWN" 307

before being shut out altogether."^"" In the midst of an economic downtum,these intemship positions provide a sign of hope for potential futureemployment opportunities.^"'

By implementing the Obama "crackdown," the administrafioncompletely ignores the enormous value these unpaid intemships offer intoday's economy.'̂ "'̂ Although some unpaid intemships might tum out to beworthless, as in Jessica's case, there are also a great number of excellentintemships similar to Sam's that offer invaluable experiences. Whileregulation is certainly necessary to protect individuals from potentialexploitative environments, current regulation is not designed to distinguishbetween the "good" and "bad" intemships. Rather than protect these"good" intemship opportunities, the "crackdown" "smother[s] whateverchance there was of private employers making room for these positions."^"^Why should companies continue to offer intemship programs "if there'seven a remote chance the action might trigger an investigation by a federalor state labor lawyer?"^"" By threatening all employers, the Obamaadministration is effectively harming the very same groups that these lawsare intended to protect. ^

Rather than "step up" enforcement of laws that are more than sixtyyears old, the Obama administration must update the legal standard bydeveloping criteria that specifically refiect the present day economicclimate. In order to develop an updated relevant legal standard thateffectively isolates the "bad" intemships without dismpting the "good"intemships, the DOL must recognize and appreciate the interrelatednessamong the students, employers, and academic institutions. Without anunderstanding about the unique needs of each party, the laws govemingunpaid intemships will remain obsolete and ineffective.

Sarah Braun *

200. Shlaes, supra note 25; ^ee also Tahmincioglu, supra note 2, at 64.201. Shlaes, ittpra note 25.202. See NACE, supra note 20.203. Shlaes, supra note 25.204. Id.205. See Stossel, Pro-Choice Intemships, supra note 32; see also Aoun, supra note 100 ("As

we invest in our ñiture by investing in higher education, we should look for ways to expand, notdiminish, the impact of experiential leaming.").•* J.D. Candidate, Southwestem Law School; M.B.A., Peter F. Drucker School of Management,Claremont Graduate University; B.A., Bamard College, Columbia University. Thank you to myfamily, friends, and significant other for their unconditional love and support. I would also like tothank Professor Gharakhanian for all her help and encouragement throughout my law school

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