U.S. Labor Department Releases New Rules for 'Educational' Internships

April 21, 2010

Amid increasing national attention to unpaid internships, the U.S. Department of Labor released a statement on Wednesday that clarifies employers' and colleges' roles under federal law.

The document applies a six-part test from the Fair Labor Standards Act, which derives from a 1947 Supreme Court decision involving railroad-company trainees, to modern-day interns in the for-profit sector. For interns to work for private companies without compensation, the Labor Department says, their positions must meet six criteria.

First, "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."

Interpretations have differed over the wording in federal labor regulations of that requirement, which says "vocational school" instead of the new "educational environment." Many employers have insisted that students receive academic credit for unpaid internships, in part to try to show compliance with legal standards. And colleges have developed a range of approaches to the credit question, offering internship-based courses, independent studies, or no-credit transcript notations to satisfy employers without altering academic philosophies or making students pay tuition to work free.

The Labor Department's statement further clarifies the "educational environment" test by noting, "the more an internship program is structured around a classroom or academic experience as opposed to the employer's actual operations, the more likely the internship will be viewed as an extension of the individual's educational experience."

"This often occurs," the statement says, "where a college or university exercises oversight over the internship program and provides educational credit."

Other conditions must also be met for unpaid internships at for-profit companies to be legal, the Labor Department says:

  • The internship is for the benefit of the intern.
  • The intern works under close staff supervision and does not displace regular employees.
  • The employer derives no immediate advantage from and may in fact be impeded by the intern.
  • The intern is not necessarily entitled to a job after the internship.
  • The employer and the intern understand that the intern is not entitled to wages.

Faculty and staff members who supervise internships for students across the country agree that some employers see interns as free labor.

"There have been businesses that have taken advantage of students," said Michael True, director of the Internship Center at Messiah College, who runs a national e-mail list on internship issues.

But campus officials, awaiting the Labor Department's guidance, had also expressed concern that new rules might scare off good-faith employers offering quality internships. Mr. True worried that "employers would just pull in the carpet and say, 'I'm sorry, we're not going to offer those,'" he said. "'This is just too big a risk for us.'"

Still, well-structured if unpaid internships that bear academic credit can be legal, even in the private sector, said Janet Nepkie, a professor of music and music industry at the State University of New York at Oneonta. Ms. Nepkie oversees the internship program for her department, in which students keep daily logs, and she visits their work sites, discussing the interns' duties with supervisors there.

When colleges and employers work together, internships can be valuable educational experiences, she said. "I can offer assurance to companies that we will be able to show compliance," she said. "We have a partnership here."

The Labor Department plans to continue reviewing the need for additional guidance on internships, also in the public and nonprofit sectors.