Unpaid internships and the intern economy: Latest work

photo-598

A look at unpaid internships and the intern economy

As steady readers here are aware, for many years I’ve been engaged in scholarship, public education, and advocacy concerning the oft-exploitative practice of unpaid internships. I’d like to provide a quick update on my latest activities in this realm.

I just posted to my Social Science Research Network (SSRN) page a short law review essay, “‘Mass Exploitation Hidden in Plain Sight’: Unpaid Internships and the Culture of Uncompensated Work,” a followup to an excellent symposium on employment law issues hosted by the Idaho Law Review last year. For those who would like a more compact scholarly summary of recent major legal and policy developments concerning the employment rights of interns and the larger implications of the burgeoning “intern economy,” this piece will provide it. You may freely download it from my SSRN page.

Brief filed by attorneys at Lieff Cabraser

Brief filed by attorneys at Lieff Cabraser

Wang v. Hearst Corporation is one of the most prominent legal challenges to unpaid internships, and the case is currently pending before the U.S. Court of Appeals for the Second Circuit. Recently I agreed to be a party to a “Friend of the Court” brief supporting the legal position of the unpaid interns, organized by the National Employment Law Project and authored by Rachel Geman and Michael Decker, attorneys at the law firm of Lieff Cabrasser in New York City. Rachel and Michael did a wonderful job on the brief, seamlessly incorporating suggested additions from parties into their already superb draft. (You may go to this link for a pdf of the brief.)

Enjoying post-filming dinner with Nathalie Berger and Leo David Hyde

Enjoying a post-filming dinner with Nathalie Berger and Leo David Hyde

Yesterday I had the pleasure of being interviewed for a documentary project on unpaid internships being produced by Nathalie Berger and Leo David Hyde of Switzerland. During a whirlwind North American trip, Nathalie and Leo are conducting interviews with activists, writers, policy analysts, and scholars on the social, economic, and legal aspects of unpaid internships. Their documentary will paint a picture of the intern economy on a global scale. I was so impressed with their knowledge and depth of understanding of this topic, and I’m very excited to watch this project unfold.

Why this unpaid internship stuff should matter to everyone

As I wrote last week, a federal appeals court ruling in Glatt v. Fox Searchlight Pictures, Inc., reversing a lower federal court decision holding that two unpaid interns hired by Fox Searchlight Pictures were entitled to back pay under minimum wage laws and certifying a class action on behalf of other interns hired by the company, was a setback for a growing intern rights movement.

In practical terms, the decision by the U.S. Court of Appeals for the Second Circuit invites private employers and universities to collaborate on schemes that (1) create unpaid internships; and (2) charge students tuition for the “privilege” of doing unpaid work. The ruling also makes it harder for unpaid interns to band together to challenge unpaid internships via class action lawsuits.

Basically, the “intern economy” that has been growing by leaps and bounds during the past three decades got a big judicial stamp of approval last week. It may be only temporary, but the Second Circuit’s ruling sends a bigger message that the label of “intern” is now being accorded its own legal meaning, one with a lesser status than that of a regular old “employee.” By slapping the intern label on what otherwise would be deemed an entry-level job, employers can potentially be exempt from paying even the minimum wage.

“Primary beneficiary” test

The Second Circuit adopted a “primary beneficiary” test to determine whether interns should be exempt from minimum wage laws. In other words, if someone is labeled an intern by an employer, we will now engage in a balancing test to determine who gets the better of the deal, the intern or the employer, taking into account a laundry list of “intangibles” such as training, networking opportunities, and so forth. It’s noteworthy that the Court said a lot less about the intangible benefits of interns to employers, such as training, mentoring, and evaluating the next generation of new people into a profession, in addition to the tangible work contributions that many interns provide.

Furthermore, it’s clear that these hedgerows to a paycheck are being created only for those trying to get their careers off the ground. Although many new high-level managers and professionals also go through training periods and enjoy networking opportunities, they will not be subject to this legal test.

Why this matters to all of us

This litigation, and the many other pending and settled lawsuits concerning unpaid internships, obviously are of direct importance to students and recent graduates. However, we all should be paying attention to this, because these cases are raising the fundamental question of whether people have a legal right to be paid for their work.

We are going down that slippery slope. Whereas internships were once largely confined to graduate-level professional programs, they now have become staples for undergraduates as well. Even more alarming is the expansion of unpaid internships into the post-graduate stage, sometimes dressed up under the label of “non-stipendiary fellowships.”

The work-for-free creep has already entered certain vocations with a vengeance. Last year I wrote about how so many writers, journalists, and other creative folks are struggling to find gigs that pay them for their labor. I quoted an extended editorial essay titled “The Free and the Antifree: On payment for writers,” in which the editors of N+1 magazine examined the challenges of economic and technological systems conspiring to make it difficult for capable writers, journalists, editors, and other wordsmiths to get paid for their work and to earn a living. (The N+1 piece favorably cited Ross Perlin’s Intern Nation (2011) — touted on several occasions in this blog — as one of the first books to come out of the “antifree movement.”)

So…for anyone who thinks this unpaid intern stuff is someone else’s problem, please think again. This is all about the dignity of being paid for one’s labor, and the resolution of these lawsuits will help to determine if the door has been opened or closed to more and more unpaid work.

***

Media Coverage

Forbes.com

I was quoted in this Forbes.com piece by Susan Adams on the Court of Appeals ruling:

Agrees Suffolk University law professor David Yamada, who wrote the first law review article on unpaid internships back in 2002, “All the factors they drew up were really without legal authority.” In fact the judges cite no case law for their checklist. “They apparently decided to invent something new here, which is surprising at the appellate level,” says Yamada.

Bloomberg Law

I appeared on June Grasso’s radio program for a 20-minute segment, along with entertainment law professor Jay Dougherty. It was a lively, collegial exchange that allowed for some substantive give-and-take about internships and compensation. You may access the link here.

From the “Hacker Ethic” to the “Antifree Movement”: On paying writers and journalists for their work

How have we reached the point where so many writers, journalists, and other creative folks are struggling to find gigs that pay them for their labor?

I submit that some of the core roots of our current situation can be traced to the early, idealistic days of computer hacking.

An early chapter in Steven Levy’s brilliant Hackers: Heroes of the Computer Revolution (1984) includes the story of MIT students who, during the late 50s and early 60s, devoted enormous amounts of time to tinkering with early computers on their campus. They honed a sort of attitudinal manifesto on the emerging power of computing that Levy would tag the “Hacker Ethic” (pp. 39-49):

  • “Access to computers…should be unlimited and total”
  • “All information should be free”
  • “Mistrust Authority — Promote Decentralization”
  • “Hackers should be judged by their hacking, not bogus criteria such as degrees, age, race, or position”
  • “You can create art and beauty on a computer”
  • “Computers can change your life for the better”

There’s a ton of idealism in these precepts. It imagines a world transformed by emerging computer technologies, and it reflects the early fascination with, and anticipation of, what digital power could do for society.

But there’s one point that, with the gift of hindsight, raises special concern: All information should be free. The Hacker Ethic didn’t get around to asking the logical question, If all information is free, then who will pay the producers and creators of this information?

Read it for free

The excellence of Levy’s book notwithstanding, “Hacker Ethic” never caught on as a branding term to help characterize the early age of computing. However, as the Internet became part of our everyday lives in the mid-to-late 1990s, we quickly assumed that the Information Highway was a freeway for us to read, print, and download without charge.

Sure, we expected to pay for products marketed via e-commerce, but when it came to information online such as articles in newspapers and magazines, the opposite was the case. Concededly, publishers of periodicals could not have anticipated how sharing articles from their print editions eventually would morph into people trading in their hard-copy subscriptions for free online access. But in lightning fast time, it was so.

As this trend became a stampede, conventional newspapers and magazines that had long been sustained by advertising found those dollars drying up. As subscribers dwindled and e-commerce proliferated, once-loyal advertisers took flight.

An emerging antifree movement?

This expectation of free online information has massive labor implications. If people aren’t paying for the articles they read online, then how are those who produce the content being paid for their work?

In an extended editorial essay titled “The Free and the Antifree: On payment for writers,” the editors of N+1 magazine examine the challenges of economic and technological systems conspiring to make it difficult for capable writers, journalists, editors, and other wordsmiths to get paid for their work and to earn a living:

If this was not yet a movement, it was definitely a mood—antifree—and it was fighting a more difficult battle than the proponents of free had. The Free movement had a few professorial spokespeople and millions of adherents; antifree was a small group of interested artisans speaking up for the dignity of being gainfully employed. As antifree grew beyond the small world of left-wing blogs, it attracted 25-year-olds who objected to being paid $50 by a corporate website that presumed them lucky to get the experience. It attracted veteran journalists who balked at being asked to write for a large, profitable magazine’s website for chump change. And it attracted unpaid interns, who at profitable media corporations (ranging from Condé Nast to Gawker), actually filed suit for violations of labor laws. These were individual stories, but they added up. The entities that had once supported journalists and writers were now doing their best not to pay them for the simplest of reasons: they could get away with it.

The N+1 piece favorably cites Ross Perlin’s Intern Nation (2011) — touted on several occasions in this blog — as one of the first books to come out of the antifree movement.

Back to basics

At times, advocates for intern rights have been greeted with derision, as if calls for the minimum wage in return for work rendered were somehow the yammerings of entitled young people. In reality, here in the early 21st century, the emerging antifree movement is about returning to a familiar, simple labor theme: People should be paid for their work. It may be laboring with mouse and keyboard rather than with pick and shovel, but it is work nonetheless.

The dignity of a living wage

Across America, labor activists and other progressives are calling for a higher federal minimum wage, often citing the personal financial challenges that confront low-paid retail and fast food workers. The current minimum wage is $7.25/hour, though some states have adopted a slightly higher one. Advocates are calling for a new minimum wage ranging from $10.00 to $15.00 an hour.

Whenever a minimum wage hike is proposed or debated, opponents claim that doing so will reduce jobs. At the far end of that spectrum, virulent opponents of any minimum wage law claim that such government mandates are “job killers.”

Yes, I suppose if you got rid of the princely $7.25/hour minimum wage, you could take the same hourly rate and pay three people $2.00/hour and still have a $1.25/hour as a bonus for the CEO. But that’s not “job creation,” it’s exploitation. Take away the minimum wage and you get a labor situation like that in Bangladesh, where wealthy corporations pay factory workers a pittance and subject them to dangerous working conditions. (After all, American factory jobs moved overseas to avoid paying workers good wages and benefits!)

Current minimum wage and low-wage earners often find themselves having to access public benefits such as food stamps to get by. The low minimum wage means, in effect, that American taxpayers are indirectly subsidizing corporations such as Walmart and McDonald’s and their shareholders by supporting living expenses for workers who can’t afford to live on their paltry paychecks alone.

Above all, we need to frame this debate in terms of human dignity. Okay, so maybe that high school senior from an upper middle class family who works part-time to earn spare cash can get by on $7.25/hour. But for those supporting themselves and others, a full-time job at least should pay for the basics. In fact, let’s remember that Congress’s intent behind enacting the federal minimum wage law during the heart of the Great Depression of the 1930s was to provide a living wage. It’s a shame that we have to invoke the hardship of our last systemic economic meltdown to remind ourselves of that.

Google: Awesome and not-so-awesome

Very few individuals have either all good or all bad qualities. Hopefully we have more of the former and less of the latter.

The same goes for companies, and few capture these extremes more than Google.

On the one hand…

I am not a Google power user, so I haven’t even started to tap its many features. But I am continually blown away by its capabilities as a search engine. In my experience it ranks multiple levels above its competitors.

I can type in bits of phrases and find exactly what I’m looking for. I can go on fishing expeditions and discover incredibly useful and interesting things. The other day I typed in an airport location to a home address, and up popped super accurate driving directions to help direct a cab.

In sum, Google has redefined how we obtain information. Its programmed “intuition” is brilliant.

Google also appears regularly on lists of the best employers, especially among high tech companies. It ranked no. 1 on the 2013 Fortune list of the 100 best employers. It topped a 2012 LinkedIn survey of most desired global employers. If you have the right skill sets, then this is a destination of choice.

Indeed, even Google interns make a fantastic salary. As reported by Glassdoor.com, software engineering interns are paid an average of over $6,000/month. This is a far cry from mega-gobs of unpaid internships offered by so many other employers that could surely afford to pay their interns.

On the other hand…

If you don’t have those high demand skills, however, your compensation prospects at Google may not be so great. For example, Laura Sydell reports for National Public Radio on how wealthy Bay Area companies like Google contract with firms that pay low wages to provide basic services:

Santa Clara County, Calif., is home to Google, Apple and eBay. So it’s no surprise that the median household income was $91,000 a year in 2012, one of the highest in the country. Yet one-third of the households in the county don’t earn enough for basic living expenses, even when they work at some of those big tech companies.

Take Manny Cardenas, a security guard at Google who lives in low-income housing in San Jose and commutes regularly to Google’s sprawling corporate campus in Mountain View. Cardenas, a stocky, soft-spoken 25-year-old, has been working as a part-time security guard at the search giant for the past year and a half. . . .

. . . Cardenas earns $16 an hour, has no benefits and never gets more than 30 hours a week. In a good month, he brings home about $1,400. If Cardenas didn’t live with his mother, he says, he probably wouldn’t have a roof over his head.

Granted, $16 an hour would be a living wage in other parts of the country. But it doesn’t go far in northern California. Because of the contracting arrangement, those wages will never be factored into Google’s average compensation figures. Google could, if it wished, exercise its economic clout and work only with contractors that pay living wages and benefits.

Unfortunately, Google also is using its abundant monies to advance a policy agenda furthering the interests of the wealthy and powerful. As reported by Nick Surgey for BillMoyers.com, Google funds a bevy of far right think tanks and advocacy groups:

Google, the tech giant supposedly guided by its “don’t be evil” motto, has been funding a growing list of groups advancing the agenda of the Koch brothers.

Organizations that received “substantial” funding from Google for the first time over the past year include Grover Norquist’s Americans for Tax Reform, the Federalist Society, the American Conservative Union (best known for its CPAC conference) and the political arm of the Heritage Foundation that led the charge to shut down the government over the Affordable Care Act: Heritage Action.

In 2013, Google also funded the corporate lobby group, the American Legislative Exchange Council, although that group is not listed as receiving “substantial” funding in the list published by Google.

Assessing

Are remarkable high tech innovations incompatible with a public policy agenda that embraces the common good? Can attractive salaries and model work environments for highly skilled workers co-exist with a living wage and benefits for all?

Socially responsible capitalism means taking the moral high road, even when there’s no government regulator forcing you to do so. When private companies enjoy great success, they can opt to share their bounties and support a rising tide that lifts all boats. Google has immense economic and, hence, political power. Wouldn’t it be great if the company opted to become a standard bearer for ethical, inclusive business practices?

Democratic National Committee: Pay your interns

While Democrats are leading the call for a higher minimum wage, their own Democratic National Committee doesn’t bother paying its interns the current one.

The DNC is currently accepting applications for 2014 internships. The work done by interns may vary, but note how the DNC itself describes interns’ contributions as being “vital” to its daily functioning:

Intern responsibilities and tasks vary depending on department, but all interns play an important role in their departments.  While all interns will perform some administrative tasks, making copies — filing, etc. — the work you do is vital to the day to day functions and department projects DNC staff are working on.  For example:

Communications allows interns to work closely with the media, collecting daily news clips, formatting press releases, and monitoring television appearances by Democratic surrogates.

Unfortunately for those who aren’t from well-to-do families or don’t have other sources of funding, the DNC internships are unpaid. While a small stipend may be available to a limited number of interns, most will have to fend for themselves.

I’m a big supporter of people volunteering to support their favorite candidates. But I also think that office interns for political organizations should be paid for their work. If the DNC wants to widen opportunities for all to see the inner workings of party leadership and to become familiar with this side of the political process, then it will find the money to pay at least the minimum wage to its interns. In doing so, it will send a valuable message about walking the talk.

***

Hat tip on DNC listing: Ben Pianko

Condé Nast shutters its internship program in the face of minimum wage lawsuits

Condé Nast, publisher of high-end magazines such as VogueVanity Fair, and GQ, has shuttered its well-known internship program in the face of lawsuits alleging it is in violation of minimum wage laws. Current interns have been paid stipends that average out to about a dollar an hour. Apparently the company decided it was better to stop hiring interns than to pay them the princely minimum wage.

Interview with ProPublica

As part of ProPublica’s investigative project on the intern economyCasey McDermott did a wide-ranging interview with me about the intern economy. From that interview, here are my specific points about the Condé Nast development:

What is your initial reaction to the news that Condé Nast will halt its internship program?

I was disappointed but not surprised. Disappointed because a company like Condé Nast, which publishes high-end, big-budget magazines, certainly can afford to pay its interns the minimum wage. It also strikes me as being very shortsighted. They have an opportunity to evaluate promising candidates for future employment and to help train the next generation of writers and creative people, while gaining the benefit of their work. It could’ve been a win-win, but they opted for the lose-lose.

This move is often cited as one potential drawback to calling for an end to unpaid internships — do you think it will trigger other companies who are facing pressure for internship compensation practices to do the same?

I think it’s a toss-up in terms of what will happen next. Some companies may end their internship programs; others will realize that paying at least the minimum wage is a mutually beneficial move.

Do you think this might affect the pending lawsuit against this company, or those against other companies?

While I can’t get into the heads of judges and speculate on how current events affect their legal analysis, the questions of compensation as set out by the Department of Labor and the courts seem pretty clear cut as to the key factors to be considered. The Condé Nast decision shouldn’t affect judicial and administrative rulings if the standards are properly applied. However, it’s possible that federal and state labor departments will be under increasing pressure from corporate interests to ease off on any enforcement efforts concerning unpaid internships. This may become a more political issue as the intern rights movement gains steam.

Overall, do you anticipate any reduction in internships as a result of increased scrutiny of intern wages and treatment?

I think we’re in a period of potential restructuring of what we’ve been calling the intern economy. Similar to what we’re seeing with health care, there will be some disruption and uncertainty as all this shakes out. It may mean a reduction in the net number of internships offered, but that reduction affects everyone equally in terms of supply.  In addition, given the NACE studies showing that unpaid internships may carry less clout in the entry-level job market, it’s far from clear that an overall reduction in unpaid opportunities will have a negative effect on individual employment prospects.

A “cruel and terrible mistress”?

Condé Nast’s decision is getting a lot of media play, and it has caused at least one writer to dig into the culture of its internship program . Alexander Abad-Santos, blogging for The Atlantic, gives us the scoop on interning for Condé Nast:

The death of the Condé Nast internship program is a lot like being at a funeral for the meanest, most popular girl at school. We’re now at the point where everyone is remembering what an awesome time they had at their internship and forgetting what a cruel and terrible mistress Condé Nast was. It’s not unlike hearing someone talk fondly about being hazed….

Abad-Santos quotes former Conde Nast interns waxing nostalgic about their intern experiences in Cara Buckley’s New York Times piece about the closing of the internship program and then responds:

These people reminiscing fondly about working for free and about a company that didn’t want them to pay them minimum wage. Obviously, having a set of parents willing to pay to have their kids live in New York City makes the memories a little more fond (the former interns who The Times spoke to say that living in New York City without parental aid is impossible). There’s something not right here.

The culture of Condé Nast, Abad-Santos reminds us, was the inspiration for one of the all-time bad boss books and movies, “The Devil Wears Prada.” (For fun, don’t forget to take his “Who Said It, Sorority Sister or Condé Nast Intern?” quiz!)

Stay tuned

As I’ve told reporters about the developing challenges to unpaid internships, stay tuned, there’s more to come. The legal and employee relations issues raised by the intern economy are now sharpening at the point of application and practice, and we’re still in the early stages of having these questions resolved.

***

More about the Condé Nast decision

Here are other pieces in which I was quoted about Condé Nast’s decision:

Wall Street Journal (Lauren Weber)

Fortune (Claire Zillman)

ABA Journal (Debra Cassens Weiss)

Law review article

I’ve authored a forthcoming law review article (“The Legal and Social Movement Against Unpaid Internships,” Northeastern University Law Journal), which analyzes recent legal and policy developments and the emergence of the intern rights movement.

%d bloggers like this: