Unpaid Interns Get Scrutiny; Reader Mailbag on Internships

Reader Mailbag

Reader "CM" writes ....

Hello Mish

Just two weeks ago, our human resources department blocked us from taking on an unpaid summer intern. The college student did not have any professional experience, but was trying to do something productive with his summer. My colleague decided to give him a shot. HR blocked the internship for fear of breaking the law.

How ridiculous is that? A college student with no professional experience wants to work as an intern and we would like to extend him an offer, but we didn't take him on for the summer yet due to the concern that we would be breaking the law.

Best,
CM

Unpaid Interns Get Scrutiny

It's easy to explain why HR nixed the deal.

A federal judge in New York recently ruled moviemakers violate labor laws if they do not pay interns.

Bloomberg reports Sleeping-Giant Issue of Unpaid U.S. Interns Gets Scrutiny

[Student internships], especially common in competitive industries like journalism, finance and filmmaking, could change if the appeals court upholds the ruling of a federal judge in New York who found that moviemaker Fox Searchlight Pictures Inc. violated labor laws by not paying two of its interns. Cases have also been brought against Hearst Corp., Conde Nast Publications and the Public Broadcasting Service’s Charlie RoseShow.

“This question of whether private-sector internships violate the minimum wage laws has been sort of a sleeping-giant issue for many years,” said David Yamada, director of the New Workplace Institute at Suffolk University Law School in Boston. “The absence of payment is done with a wink and a nod. Interns know they better not make any trouble about this.”

Half Unpaid

According to a survey by the National Association of Colleges and Employers, a Bethlehem, Pennsylvania-based recruiting and research group, more than 63 percent of graduating seniors in 2013 either had an internship or a co-op, a position more closely tied to an educational curriculum. About 48 percent of those were unpaid, according to the survey.

To critics, unpaid internships are an abuse of the labor system, a way for employers to take advantage of desperate job seekers. Supporters, including some former unpaid interns, see it as a way to get training and career contacts.

Eric Glatt, 43, The lead plaintiff in the case against Fox Searchlight, Glatt had left a job at the insurer American International Group Inc. in New York to pursue a career in film. After earning a certificate in film editing, he eventually took two temporary positions on the set of the movie “Black Swan,” where he spent much of his time learning the art of making copies.

Taken Advantage

“I knew I was being taken advantage of,” Glatt, now a law student at Georgetown University in Washington, said in an interview. “I just didn’t think there was anything I could do about it.”

If Pauley’s decision is challenged and later affirmed by the U.S. Court of Appeals in Manhattan, the case might be considered in conflict with the Ohio federal appeals panel, raising the possibility that the issue could end up before the U.S. Supreme Court.
‘Legal Uncertainty’

The ruling in the Fox Searchlight case “creates a significant legal uncertainty,” said Samuel Estreicher, professor of labor and employment law at New York University. He said he would advise employers not to use unpaid interns in light of the decision.

Who Took Advantage Of Whom?

Glatt's complaint is absurd. He was extremely lucky to get experience on the "Black Swan" movie set. He brought no experience to the table. And it is crystal clear he does not even want a career in movie editing, something very valuable he may have learned as an intern.

Thousands of people would have welcomed the opportunity he got. And if he did not like the offer, then he should not have accepted. So who took advantage of whom?

Should that ruling be upheld, look for internships to become a thing of the past. That's unfortunate for college students struggling to gain work experience.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com