Colleges and universities are starting the school year already. Increasingly, internships are part of many students’ educations. Interns are also an important part of the labor force in college towns like Lincoln, Nebraska. But the use of interns raises legal and policy questions, because many internships are unpaid. The U.S. Department of Labor’s Wage and Hour Division provided a clear explanation of when they think interns should be paid. If the internship meets the following qualifications, then interns are not required to be paid. If the internship does not meet these criteria, then interns are required be paid the federal minimum wage and overtime as required by the Fair Labor Standards Act (FLSA).
- “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;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.”
In short, the more the internship is structured around an actual educational or classroom experience, the less likely interns will be covered by the FLSA. The more it appears that employers are using unpaid interns as substitutes for paid workers, the more likely it is that internship will be covered by the FLSA.
Unpaid internships have often been criticized for exacerbating inequality, because unpaid internships are required in many fields, and only relatively affluent students can afford to work to work for free. Some economists also believe that the rise of unpaid internships has been made possible by lack of enforcement of wage and hour laws.
So if you are working an unlawful unpaid internship, then you can file a suit under the FLSA. However, this limits you to wages paid at the federal minimum wage rate of $7.25 per hour. Many states also have state wage and hour laws that differ from federal law. One advantage of filing under the Nebraska Wage and Hour Act is that the Nebraska Wage and Hour Act has criminal penalties for employers who violate the act. Criminal penalties often give employers an incentive to settle cases to avoid the criminal penalty. Nebraska also raised its minimum wage to $9 per hour. An unanswered question is whether Nebraska courts would let unpaid interns sue under Nebraska law for the higher minimum-wage rate.
The Nebraska Wage and Hour Act provides some exemptions for religious, nonprofit, educational, and charitable organizations, as well as for volunteers of those organizations. I would anticipate that exemption could very well be made to be a legal defense in wage and hour actions involving interns in Nebraska. The issue of pay within the nonprofit sector has become a hot topic among some voices in the nonprofit sector. I agree with voices within the nonprofit sector that expansion of the overtime exemption and the increase of the minimum wage in some states is good for the nonprofit sector, because it helps the people who nonprofits serve.
Nebraska’s minimum wage hike has also raised some questions about youth and training wages that will be addressed in another post.