The Department of Labor clarifies the statute of unpaid internships.

The American Bar Association (ABA) raised cocnerns regarding the limitations imposed by the Fair Labor Standards Act (FLSA) on the ability of law students to secure work experience through unpaid internships with private law firms.
The ABA sought clarification from the department of Labor regarding certain situations where interns (either law students or students who have recently graduated) would work on pro bono matters in unpaid internships with for-profit law firms.
Usually unpaid internships are illegal because if a firm derives a profit from the work done by an intern, then the intern must receive compensation for his work because under the FSLA he would most likely be considered an employee. In its guidance letter the DOL notes that a law student intern would be considered an employee subject to the FSLA requirements “where he or she works on a fee generating matters, performs routine non-substantive work that could be performed by a paralegal, receives minimal supervision and guidance from the firm’s licensed attorneys, or displaces regular employees.” However, the firm may derive intangible, long-term benefits such as genreral reputational benefits associated with pro bono activities (because it is not immediate advantage). If interns were classed as workers under the FLSA they would be entitled to minum wage, benefits, and overtime unless they are covered by some other specific rules.
In its response letter the DOL stated that whenever the following six creteria are met, there is no employment relationship under the FSLA :
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 benefit of the intern;
3) the intern does not displace regular employees, but works under close supervision of existing staff;
4) he 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.

The DOL’s response letter also stated that law firms need to provide students with a written assurance that they will receive an educational experience related to the practice of law and that thes students will be assigned exclusively to non-fee-generating pro bono matters.

The DOL’s guidance letter notes that the Labor and Employment Law Section leadership has reviewed the case of law school graduates (who have not yet passed the bar) and stated that they may not volunteer for private law firms without pay in the same manner as law students. The two main reason for this different approach are that law student graduates have completed their legal education and law schools would not have the ability to act as intermediaries (they would not be able to monitor compliance with the principles set forth aforementioned).

Unpaid internships, in our experience, are illegal if they are not primarily for the interns’ benefit and predominantly educational and cultural rather than administrative in nature. If this sounds familiar, give us a call.