Internship policy challenged for violating federal law

In today's economy, with high unemployment rates and too few jobs, unpaid internships have become increasingly common in Louisiana. While internships are nothing new, they never received as much attention as they do today. And some people have raised business law concerns that internships can be exploitive, and that unpaid internships are being used as a means to avoid hiring and paying an otherwise skilled employee to do the job.

In a recent lawsuit filed in a federal district court, a former intern for Harper's Bazaar alleged that the magazine's parent company, the Hearst Corporation, violated federal and state law by not paying her for the time she worked at the magazine. According to the lawsuit, unpaid interns have become synonymous with entry-level employees, working long hours and conducting essential business, but without pay.

The concern is not simply that the practice exists, but that it has become so widespread. According to the lawsuit, the failure to compensate interns and the prevalence of the practice undermine our economy by curtailing employment opportunities and limiting those that exist to individuals with means. On the other hand, internships provide students with school credit and an invaluable educational opportunity, especially at a time like now.

Whether the practice is considered a violation of the Fair Labor Standards Act will come down to a careful consideration of a number of factors outlined in the act. The FLSA states that unpaid internships are lawful if they serve an educational purpose, benefit the intern, do not immediately advantage the employer and do not displace regular employees.

To avoid these and other challenges to a company's internal policies, a business law firm should be used to conduct a regular review of internal policies, procedural handbooks, and other on-boarding materials to make sure they pass legal muster. Having such policies reviewed might protect a company against business litigation later on.

Source: Reuters, "Unpaid intern sues Harper's Bazaar for minimum wage," Jonathan Allen, Feb 2, 2012

Source: New York Times, "Former Intern Sues Hearst Over Unpaid Work and Hopes to Create a Class Action," Steven Greenhouse, Feb. 1, 2012

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