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Is use of interns abuse of labor?

- The Washington Times - Wednesday, April 7, 2010

It's a Washington tradition as deeply rooted as the cherry blossoms, as predictable as a recess appointment. But as hordes of student interns descend on the capital seeking experience and contacts, some labor market analysts are questioning the fairness and legality of the entire practice.

Interns - the vast majority of whom are unpaid - do not enjoy federal legal protections against sexual harassment and discrimination and are increasingly used by struggling employers as a source of free labor, critics say.

"The current system of regulations governing internships must be reformed, both for the immediate protection of students' rights and also to maintain a strong and vibrant labor market that compensates all workers fairly," researchers Kathryn Anne Edwards and Alexander Hertel-Fernandez of the Economic Policy Institute (EPI), a labor-affiliated think tank, said in a study.

Exploitation of interns is not a new phenomenon - Monica Lewinsky began an unpaid summer internship at the Clinton White House 15 years ago this July. But the brutal job market and the dim employment prospects for college graduates in 2010 have only increased the temptation to skirt the rules.

Labor law blogger Jeffrey M. Hirsch, associate professor at the University of Tennessee College of Law, said, "It's obviously been an issue for some time, but the bad economy has given employers more incentives to pinch pennies and made interns more desperate for experience - even the unpaid variety."

While demand for coveted internships is at an all-time high, "they can also undermine the purpose of wage laws and highlight class problems when only more wealthy students can afford months of unpaid full-time work," Mr. Hirsch noted.

The National Association of Colleges and Employers (NACE) has tracked an explosion in the use of internships to gain work experience and try to find a job. In 1992, just one in 10 graduating college seniors said they had participated in either a paid or unpaid internship. By 2006, the percentage had jumped to 83 percent - 2.5 million U.S. students annually.

A separate NACE survey found that three-fourths of employers said that experience from an internship - whether at their workplace or elsewhere - was the "primary" reason for hiring a new worker.

But the explosion in popularity has given rise to problems, for employers and would-be interns alike, Ms. Edwards and Mr. Hertel-Fernandez said.

The New York Times reported last week that states such as California and Oregon have begun probing whether private employers are using unpaid intern programs to dodge minimum-wage laws. M. Patricia Smith, the U.S. Labor Department's new top enforcement official, conducted a similar probe when she was New York state's labor commissioner.

The 1938 Federal Labor Standards Act, modified by subsequent Supreme Court decisions, appears to set a high bar for the use of student interns by private-sector employers. Nonprofit organizations and the federal government operate under a different standard, while interns on Capitol Hill are governed by a special law covering only Congress.

A six-part test set by federal labor officials on who qualifies as an intern/trainee requires that interns "not displace regular employees," that they "work under close supervision" and that the hiring company "derives no immediate advantage from the activities of the [interns]."

Some labor law analysts have argued that a strict enforcement of the rules could threaten a vast number of existing intern programs.

The EPI study notes that, because they are not standard "employees" of a work site, interns are not covered under statutes such as the Civil Rights Act and the Americans With Disabilities Act.

The fierce competition for coveted slots - and the grim labor market in general - mean that those most likely to suffer under the present system are the least likely to complain.

"Students have a strong incentive to keep any reservations they may have about the legality of an internship to themselves," said Ms. Edwards and Mr. Hertel-Fernandez.

"The crucial role of internships in obtaining later employment and the highly competitive market for placement means that no one student has an incentive to report their employer, even in cases of blatant abuses, since another student will readily work for free," they said.