By KATHLEEN PENDER
San Francisco Chronicle
Wednesday, June 06, 2007
It's getting harder to land a job after college without experience, so it's not surprising that so many students and recent grads are willing to work in unpaid internships.
Some students are so desperate they are paying $6,500 or more to companies like University of Dreams to find them an unpaid internship. The Los Gatos, Calif. company says most of the money goes to provide room and board and weekend excursions for interns.
What many students and employers do not realize is that federal and state labor laws require for-profit employers to pay interns at least minimum wage unless the job meets specific requirements.
For a position to be exempt from California wage and hour laws, the Department of Labor Standards Enforcement requires that "the training be an essential part of an established course of an accredited school or of an institution approved by a public agency to provide training for licensure or to qualify for a skilled vocation or profession. The program may not be for the benefit of any one employer, a regular employee may not be displaced by the trainee, and the training must be supervised by the school or a disinterested agency," according to a 1996 opinion letter from the department.
In certain cases, California employees with no relevant experience who are deemed "learners" can be paid 85 percent of the state minimum wage during their first 160 hours on the job.
Under federal law, for-profit employers must pay workers unless the position meets six criteria. One says the employer "derives no immediate advantage from the activities of the trainees or students." Many employers assume that if a student earns academic credit, an unpaid internship will comply with federal laws. But "academic credit alone does not guarantee that the employer is in compliance with the six criteria of the Fair Labor Standards Act," says Deanne Amaden, a spokeswoman for the U.S. Department of Labor.
The federal law is somewhat less restrictive than California's because it does not require a school's involvement.
"We're a little more taut about it being for the benefit of the student. To ensure it is not some kind of subterfuge, we require that it be part of a licensing requirement or an educational requirement," says Anne Stevason, staff counsel in the California Division of Labor Standards Enforcement.
In general, employers must comply with all federal labor laws and with state laws that are more restrictive or require higher pay, says Amaden.
The same laws do not apply to most nonprofit and government agencies, which generally can hire unpaid interns as volunteers.
Students who work in unpaid private-sector internships that should have been paid can file a federal or state wage claim and could receive back wages, even if they had agreed to work for free.
Neither the federal nor state federal labor departments could tell me if they had processed wage claims from unpaid interns. Students might be reluctant to file such claims because it would hurt their chance of getting a reference.
The laws governing unpaid internships are open to interpretation and not easy to find. Many employers, especially small ones without human resource or legal professionals, hire unpaid interns without checking the laws.
Desmond Davis, a marketing consultant for DealsPl.us, a comparative shopping site, says he was not aware of the labor laws when he advertised on Bay Area Craigslist for an unpaid marketing/public relations intern.
The intern, he says, would be "involved in confirming ad copy and helping promote some aspects of what we do."
Asked if this is the same type of work a paid employee would do, he said, "Without a doubt, it's the kind of work they would be doing if they were paid a full salary."
Then why not pay the intern?
"In this hiring market, you want to do a try before you buy," he said.
Eric Lochtefeld, chief executive of University of Dreams, says his company will place "close to 1,000" students and recent grads in internships this year and "about 80 percent are unpaid."
It charges students $6,500 to $9,000. They get guaranteed placement in the industry of their choice; room and board, usually in a college dorm; most meals; transportation to and from work; weekend excursions; resume and interview coaching; and one unit of academic credit from Menlo College in Atherton. The company awards some scholarships.
Most of the jobs are in big cities such as New York, Los Angeles, San Francisco and London.
Lochtefeld says "it's up to the compliance department at each company to determine" if the internships meet wage and hour laws. "The reason we have course credit is that we know that 90 percent of the companies we work with will ask for that. The reason cited is the minimum wage law."
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