Unpaid internships – hard work, questionable legality

For-profit companies still skirt Mass. requirements for intern pay

BOSTON-BASED ARGOPOINT placed an ad on Craigslist in February seeking a marketing intern of whom a lot seems to be expected.

The ad specified nine required qualifications, including a strong academic background, excellent verbal and written communication skills, high attention to detail, strong analytical and problem-solving abilities, and demonstrated leadership experience.

The ad also listed eight responsibilities, including “research and analysis, creation and improvement of firm marketing materials, planning and execution of marketing campaigns and projects, leveraging consumer analytics, and developing reports and presentations.”

The salary being offered for this highly demanding position: $0.

Like most of the internship ads on Craigslist, the one posted by Argopoint appears to violate minimum wage laws requiring that such positions be training-oriented and not displace any existing workers. A recent court decision appears to weaken the reach of the federal law in a few states, but Massachusetts law is more restrictive, barring virtually all unpaid internships at for-profit companies. Argopoint, a consultant to corporate legal departments, is a for-profit company.

Both the Massachusetts Department of Labor Standards and the office of Attorney General Maura Healey, which oversee the state minimum wage law, declined to comment on the legality of the unpaid Argopoint job, each one referring a reporter to the other.

But David Yamada, a professor of law and director of the New Workplace Institute at Suffolk University Law School, says it’s unlikely the Argopoint position meets the federal Labor Department’s six-part test for an exemption from the minimum wage law.

“The position’s responsibilities are significant, involving professional tasks likely beyond that of even an entry-level job,” he says. “This looks like a regular job tagged with the label of ‘intern.’”

Jason Winmill, Argopoint’s managing partner, did not respond to requests for an interview. The company’s Craigslist ad says the firm is in compliance with “DOL guidelines,” presumably a reference to the federal rules.

Unpaid internships are becoming more and more common as companies pursue cheap, eager labor and students look for resume enhancements and access to businesses and contacts that could help them land a paying job down the road. It’s a mutually beneficial system that few are willing to challenge.

Allison, a former student who did not want her real name used, took on multiple internships as a way to get her foot in the door in hot pursuit of a glamorous media job after graduation.

“But they were all unpaid, which means they didn’t value my work,” says the Boston native. “My parents don’t have very much money, so I had to work my friggin’ ass off juggling a part-time job as a waitress while doing these internships. I didn’t have a free moment to myself. I walked around exhausted all the time.”

Many critics of unpaid internships say they create an unlevel playing field in which students who come from well-heeled families have a distinct advantage.

“There are a lot of students who simply can’t afford to work for free for such a long period of time,” says Yamada, the Suffolk law professor, “because they have to make some money — to pay their bills, to pay their tuition, to pay their expenses, and to put a roof over their head. So they have to pass up valuable internship opportunities. It doesn’t seem to me that asking for the minimum wage in return for entry-level performance is asking a lot.”

In his 2011 book, Intern Nation, Ross Perlin estimates that there are 1 million to 2 million Americans working annually as interns, with as many as 50 percent either unpaid or earning less than minimum wage. Perlin points out in his book that an industry has grown up around internships, with companies charging students to help them land plum positions. A company called Dream Careers promises internships in Boston for a price of $8,499. Dream Careers declined comment.

“Making an industry out of internships simply renders tangible a fait accompli long in the making: internships are becoming the face of privilege,” Perlin says in his book.

Based on a 1947 US Supreme Court ruling, the six-point test cited by Yamada for determining whether or not interns need to be paid requires in part that the internship must be a training program that is similar to what would be available in an academic setting, the intern does not displace any regular workers, and the employer derives no immediate advantage from the intern’s activities. Merely because a student receives academic credit for an internship does not by itself make the internship legal.

Massachusetts law has adopted the federal six-point test, but goes further, making the requirements even more stringent.

“According to federal law, some internships can be unpaid even in cases when the work is for a for-profit company,” says Nicholas Ortiz of Boston, who describes himself as a wage and hour lawyer. “But under Massachusetts law, with minor exceptions, only internship training programs done through an educational, charitable, or religious institution can be unpaid.”

Few complain because the perceived benefits of an unpaid internship outweigh the disadvantages. But some evidence suggests a paid internship is more worthwhile than an unpaid one.

“It is a virtually indisputable fact that having an internship or co-op — especially a paid position — improves a student’s chances of receiving a job offer prior to graduation,” according to a 2015 study by the National Association of Colleges and Employers.

The study found that nearly three out of four students who had paid internships in the private sector got job offers before graduation compared to a little under 45 percent of their unpaid counterparts. The median starting salaries after graduation also favored the interns/co-ops who were paid, ranging from roughly $40,000-$50,000 for those who were paid to $30,000-$40,000 for their unpaid counterparts.

There’s also the issue of unpaid interns doing tasks they didn’t sign on for. Allison, for example, says she had to babysit her boss’s daughter a few times a week and do the dishes.

There have been a number of successful class-action lawsuits brought by unpaid interns, with verdicts against some big players, including television host Charlie Rose’s production company, NBCUniversal, and Warner Music.

But a recent ruling involving a case against Fox Entertainment in the US Court of Appeals for the Second Circuit had a different outcome. Writing for a three-judge panel, Judge John Walker Jr. held that the Department of Labor’s criteria for determining whether an intern needs to be paid are not only outdated, but not binding on federal courts. The appropriate way to assess worker status, he wrote, is to apply a “primary beneficiary test” in which the worker can be considered to be an employee only if the employer benefits more from the arrangement than the intern.

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Christopher Feudo, an attorney with the Boston firm of Foley Hoag, says that the Second Circuit decision only applies to federal law and only within the Second Circuit states of New York, Connecticut, and Vermont. What really matters for Massachusetts employers, he says, is how state agencies and Massachusetts courts interpret the Massachusetts minimum wage law, which is much more stringent than its federal counterpart.

“At least for now,” Feudo says, “regardless of whether the Department of Labor’s six criteria are dead under federal law, its rigid test is alive and well here in Massachusetts.”