On September 12, 2013, the U.S. Department of Labor (DOL) issued a letter to the American Bar Association which clarified when private law firms may utilize the services of law students for unpaid internships. The clarification is important at a time when unpaid internships have attracted scrutiny and a number of class actions have already been filed on behalf of unpaid interns.
In its guidance letter (available at www.americanbar.org/content/dam/aba/images/news/PDF/ MPS_Letter _reFLSA_091213.pdf), the DOL explained that, under the Fair Labor Standards Act (FLSA), those who perform work for a for-profit entity are generally considered employees and are entitled to minimum wage and overtime. However, if certain criteria are met, for-profit companies may hire individuals for an unpaid internship or training program. Such circumstances could apply to law students who perform unpaid internships with a private firm if the experience is for the student’s own educational benefit and the student only works on pro bono matters.
Specifically, the DOL stated that, if all of the following criteria are met, then an employment relationship under the FLSA does not exist and the student may be considered a trainee rather than employee:
- The internship is similar to training that would be given in an educational environment, even if it includes actual operation of the employer’s facilities;
- The internship experience is meant to benefit the intern;
- The intern is not meant to replace regular employees, but works under close supervision of existing employees;
- The employer must not gain an immediate advantage from the intern, and the employer’s operations may even be impeded;
- The intern is not necessarily guaranteed a job at the conclusion of the internship; and
- The employer and intern have an understanding that wages will not be paid for the intern’s time.
The DOL noted that, where a pro bono experience is “academically oriented for the benefit of the student” and the law student’s work does not generate a fee or otherwise free up staff resources for billable work, the student is considered a trainee. Therefore, he or she would not be entitled to minimum wage or overtime.
It should be noted that the above rule does not apply in the same manner to recent law school graduates who have not yet passed a state bar. The DOL stated that law graduates may not “volunteer” for private law firms without receiving pay in some form. The key difference is that law school graduates have already completed their legal education. Additionally, the concern is that law schools cannot act as intermediaries to the same extent between graduates and law firms and are therefore unable to ensure compliance with the DOL’s guidance.
The DOL’s letter will ideally have the effect of increasing student volunteerism and allowing private law firms to continue to provide pro bono legal assistance. However, law firms must ensure that their internships meet the above criteria. Otherwise, under the FLSA, the firms’ interns may be an employee entitled to wages.
Finally, it should be further noted that the above addresses federal law only. To qualify as a trainee under New Jersey law, the training must occur outside regular work hours. It is therefore unclear whether law students could perform pro bono work for New Jersey law firms without being deemed employees under New Jersey law.