To Benefit or Not to Benefit: Mutually Induced Consideration As a Test for the Legality of Unpaid Internships

Over the last fifteen years, unpaid internships have become a part of our generation’s psyche. You try to get into the best college; then you try to get the best unpaid internship; and finally you try to get the best full-time job. This pattern, however, has raised four primary problems. First, it disadvantages students from the middle and lower class because they can’t afford to take unpaid internships, which increases and perpetuates socioeconomic and often racial inequality. Second, when interns are not paid, various federal sexual harassment and discrimination legal protections do not apply, since courts have held that such interns are not classified as employees. Third, the emphasis on having work experience in today’s employment market necessitates that already debt-burdened students take unpaid internships, putting themselves into further financial trouble. And fourth, employers are firing full-time employees and replacing them with teams of unpaid interns.

Despite these concerns, unpaid internships persist, and as of today, there is little to no case law about them—mainly because interns fear the whistle-blower stigma that would arise from bringing a lawsuit. Recently, however, two class action suits were launched against prominent media and entertainment companies. My Comment seeks to shape the law for these cases of first impression. Using a Supreme Court case from the 1940s, the Fair Labor Standards Act, and the Department of Labor’s Fact Sheet #71, I propose a simple test to determine the legality of unpaid internships: if a for-profit employer, ex ante, expects to derive a benefit from the internship, then the intern is an “employee” (not a “volunteer”) who deserves at least the minimum wage and also protection from sexual harassment and discrimination.

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