STOCK MARKET WATCH -- Friday, 18 April 2014

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5. How the Labor Department Has Let Companies Off the Hook for Unpaid Internships

http://www.alternet.org/news-amp-politics/how-labor-department-has-let-companies-hook-unpaid-internships?akid=11715.227380.d44Qpu&rd=1&src=newsletter981493&t=20


As the number of unpaid internships has exploded over the past several decades, labor activists have become increasingly concerned that these arrangements exploit young workers and violate minimum wage law. Two years after the U.S. Department of Labor announced its intent to crack down on unpaid internships, a federal investigator called a final meeting with the biggest offender the agency had found: an outdoors magazine based in Santa Fe, N.M. The investigator reported interns at Outside magazine had been fact-checking, reporting, researching, proofreading and preparing content for the website, all for about $250 a month. The Wage and Hour investigator told Outside's lawyer that this arrangement violated minimum wage law, and the publication owed its interns back pay.

Outside's counsel said she'd talk it over with her client. They spoke again two weeks later. Outside refused to pay. And with that, the Labor Department dropped the case and 28 former Outside interns never received the nearly $172,000 in back wages the department's investigator thought they deserved. The Labor Department declined to explain to ProPublica its decision not to pursue back pay for the Outside interns.

As the number of unpaid internships has exploded over the past several decades, labor activists have become increasingly concerned that these arrangements exploit young workers and violate minimum wage law. So four years ago, the Labor Department issued new guidelines clarifying what makes an unpaid internship legal: Namely, the internship has to be of educational benefit to the intern. Interns have to understand they're not entitled to a job or wages. And the biggest hurdle: the employer can't derive any immediate benefit from the intern's work or use interns to displace regular employees.

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"If you're a for-profit employer or you want to pursue an internship with a for-profit employer, there aren't going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law," Nancy Leppink, acting director of the Wage and Hour division, told the New York Times.

But since then, the Labor Department has not made enforcing its guidelines for unpaid internships a priority. In the first three years after it issued its fact sheet, the Labor Department says it cited just 11 for-profit companies for failing to pay interns minimum wage. Instead of proactively investigating employers that advertise illegal internships, the department has decided to rely on complaints even though the agency admits unpaid interns are hesitant to complain, for fear of endangering their future career prospects.

"The Wage and Hour Division does not have a strategic enforcement initiative focused on unpaid interns," a department spokesman wrote. "Our investigators focus on industries where historically we have found high incidences of violations and where the most vulnerable workers are employed: industries such as construction, janitorial, agriculture, and restaurants. That will continue to be our focus."

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"It doesn't take a genius to find violations...You can open up Craiglist in any city and find, on its face, hundreds of employers who are openly, blatantly violating the law," said Ross Eisenbrey, vice president of the Economic Policy Institute and former policy director of the Occupational Safety and Health Administration. "They basically don't think of the intern workforce as a vulnerable segment of the population."

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