Internships in the U.S.

Before the economic crisis, the discussion about internships was front and center in the general media.  It also coincided with a time in my life when everyone was talking about “internships” as I neared graduation and began looking at my employment options.

Today the emphasis on finding a great internship still exists, but the problem is even worse than it was a few years ago.  Recent graduates can have several internships before they even start generating income for their work.  Sometimes recent graduates take “lesser internships” to become competitive for future internships.  It is a trend that has spiraled out of control.

The original definition for an internship in the United States is defined by six criteria which are based off of U.S. Supreme Court decision Walling v. Portland Terminal Co., 330 U.S. 148 (1947).  Before discussing why this case should no longer serve as precedent for defining the modern day internship, I will list the six criteria.

 According to the National Association of Colleges and Employers (NACE):

The legal considerations are addressed through six criteria for unpaid interns for the service they provide to “for-profit” private sector employers articulated in the Fair Labor Standards Act (see FLSA Fact Sheet #71). Essentially, if the six criteria are met, the Department of Labor (DOL) considers there to be no employment relationship. The six criteria established by the DOL are:

  • The internship, even though it includes actual operation of the employer’s facilities, is similar to training that would be given in a vocational school.
  • The internship experience is for the benefit of the student.
  • The intern does not displace regular employees, but works under the close observation of a regular employee.
  • The employer provides the training and derives no immediate advantage from the activities of the intern. Occasionally, the operations may actually be impeded.
  • The intern is not necessarily entitled to a job at the conclusion of the internship.
  • The employer and the intern understand that the intern is not entitled to wages for the time in the internship
  • (According to Northwestern’s website, NACE now has a seventh criterion.)

Going into detail about how different types of businesses break some of the above criteria is a book in itself.

Also without getting lost in the legal jargon, Walling v. Portland Terminal Co., 330 U.S. 148 (1947) was decided in favor of the railroad and against the prospective yard brakesmen.  The yard brakesmen completed their preliminary training for approximately seven to eight days for free.  If they successfully completed the training, they were added to a list for accepted and available brakemen that the railroad could have used.  This training required “close scrutiny” and their work might not have “expedite[d] the company business, but may, and sometimes [did], actually impede and retard it”.  Their training also did not “displace any of the regular employees, who do most of the work themselves”.

If reopened today, most people would not see anything wrong with this type of training or “internship”.  It lasted less than two work weeks and basically provided free training for workers to contract themselves to the railroad.  Today the situation is very different.  Students are expected to find internships after graduation for several months, or even years.  Normally the more prestigious ones (and the more “legally compliant” ones) do not offer any form of reimbursement whatsoever.

For me, the most shocking criterion is number five: interns are not necessarily expected to work for the company after their internship.  I feel as if this one is also the least understood.  Many people interpret this as meaning “do not hire the intern after the internship is complete”.  This is unfortunate for the intern who has other expectations.

Also the terms “internship” and “apprenticeship” become confused in the fifth criterion.  Companies cannot use internships as a “trail period” for potential employees.  In my opinion, this is unfortunate.  Why not have a week or two trial period to see if your new hire is really competent?  See this article.

Also the asymmetries of the very understanding of what an “internship” is favors interns that come from wealthier families.  They can afford to take several internships and build up “valuable” experience.  Poorer students and young adults cannot afford to work for free over a long period of time.  They must work a part or even full-time job just to afford to intern for free.  They might have to accept less prestigious internships, which in turn provide less valuable connections in their field.

Before Walling v. Portland Terminal Co., 330 U.S. 148 (1947) was decided, there were other cases that ruled in favor of the employees in accordance to 15(a)(2) and 15(a)(5) of the Fair Labor Standards Act, 52 Stat. 1060, 1068, 29 U.S.C. 201 et seq., 215(a)(2), (5) 29 U.S.C.A. 201 et seq., 215(a)(2, 5).  In the cases of Tennessee Coal, Iron & R.Co. v. Muscoda Local No. 123, 321 U.S. 590, 64 S.Ct. 698, 152 A.L.R. 1014 and Jewell Ridge Coal Corp. v. Local No. 6167, United Mine Workers, 325 U.S. 161, 65 S.Ct. 1063.  The court rejected that the Fair Labor Standards Act “was not intended to interfere with long-established customs…”.  The same logic was also applied to Anderson v. Mount Clemens Pottery Co., 328 U.S. 680, 66 S. Ct. 1187.

Mr. Justice Jackson’s concurred, stating that it would be appropriate if the Court “reconsider[ed] its approach to cases under this Act [Fair Labor Standards Act].”  He offered two rationales for reinterpreting the Fair Labor Standards Act: (1) Congress was never meant to regulate the subject at all; and (2) reconsidering the “long-established custom of an industry whose labor relations have long been subject to collective bargaining”.  Jackson only agreed on the later.

On the surface, the modern-day internship seems to be in agreement with the point Jackson concurred with.  The only difference is, today the collective bargaining done to secure the internship is in theory done by the university, that arranges internships with local companies.  Since the student pays the university to receive credits for the internship, I suspect a conflict of interest.  I doubt that the intern is securing the “best opportunity” and that the company really cannot afford to pay the internship a stipend.   Recently some universities have done away with “internship credit” entirely.  See the NewsWeek article about Columbia University.

I thank a few of my fellow COMPASS core members of IVC who have collaborated with me on this subject.  Also, I am also grateful for my experiences with AIESEC, which have further defined my stance on the modern-day domestic internship.

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