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What Do Charlie Rose and Sheryl Sandberg Have in Common? Problems with Unpaid Interns

August 15, 2013
Labor and Employment Blog Post

You might think that PBS talk show host Charlie Rose and Facebook COO Sheryl Sandberg, author of the recent book on women and leadership in corporate America, Lean In, don't have much in common. But you'd be wrong. They have quite a bit in common, and it has nothing to do with book tours or television interviews.

It has to do with unpaid interns. Both individuals have recently received a great deal of negative publicity because they used or intend to use unpaid interns in their organizations. In Charlie Rose's case, he was sued in a class action in 2012 by a former intern who claimed Rose and his production company unlawfully failed to pay her and other interns the minimum wage. Rose ended up settling that lawsuit for $250,000. Similar lawsuits are pending against other media companies.

And now Sheryl Sandberg, the COO of Facebook and a prominent spokesperson on issues facing women in the business world, is taking heat for the same issue. After her nonprofit organization, LeanIn.Org, announced on Facebook this month that the group was seeking unpaid interns, the nonprofit was roundly criticized for seeking free labor and effectively shutting the door on those potential applicants who can't afford to work for free. In fact, this issue of unpaid interns has become so hotly contested, two former unpaid interns of medical clinics in Florida have now asked the U.S. Supreme Court to get involved.

So what can employers do to avoid these sorts of disputes and ensure they are in compliance with the law? First, be aware that the U.S. Department of Labor (DOL) is highly skeptical of unpaid internships in the for-profit sector. However, for those employers who do want to offer such internships, the DOL has set forth specific criteria that it expects employers to follow in order for internships to be unpaid:

  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. The employer 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 time spent in the internship.

If one of these factors is not met, then – at least under the DOL's interpretation – the intern may have to be treated as an "employee" entitled to the minimum wage for all hours worked and overtime for all hours over 40 in a workweek. Thus, for example, if an intern is performing productive work for the employer, or the employer uses the intern in place of regular employees or to supplement its existing workforce when business picks up, then the intern would likely need to be paid for his or her time.

Of course, paid internships will almost always comply with wage-hour laws if the interns are paid at least the minimum wage for all hours worked (currently $7.40 per hour in Michigan), and overtime at time-and-a-half their regular rate of pay for all hours worked over 40 in a workweek.

Employers who intend to offer unpaid internships should consider consulting with legal counsel to ensure that their program is in full compliance with the wage-hour laws, particularly if they are a for-profit company. If even Charlie Rose and Sheryl Sandberg are at risk for their unpaid internship programs, then no employer is safe.

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