Boisterous Billy Clint is a TV and film director in Los Angeles. With the economic downturn, times are slow in the film business. Billy laid off most of his corporate staff last year just to keep the doors open. Hoping to get the rights to produce the next big show, Billy still has administrative work to do. In what he thought was a stroke of genius, Billy contacted University of Big Dreams. For a small fee, UBD offered to find Billy a college student hankering to get an inside look at the entertainment industry to work without pay as Billy’s summer intern. Monica Lansky is a sophomore majoring in film and economics, having work experience in neither. Monica leapt at the chance to work for Billy even though she would not be compensated.

Everybody wins, right? Or, does Boisterous Billy Clint have a problem?

Just in time for the arrival of summer interns at many companies, the U.S. Department of Labor issued its Fact Sheet #71 announcing that it will be “cracking down” on unpaid internships. For-profit, private sector employers will be very limited in the circumstances in which they can offer an unpaid internship. All of six criteria must be satisfied to avoid the DOL from finding that there is an employment relationship requiring that the intern be paid at least minimum wages. They are:

  1. the intern should not replace a regular paid worker,
  2. the work should be similar to the training an intern would receive at an academic or vocational school,
  3. the employer should derive no immediate advantage from the activity of the intern, and on occasion, the employer’s operations may actually be impeded,
  4. the internship experience is for the benefit of the intern,
  5. the intern is not necessarily entitled to a job at the conclusion of the internship, and
  6. the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.


If your company elected to hire interns this summer, you might consider the following:

The more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience. Oversight by UBD over the internship program and educational credit would be a plus. In addition, the more Billy can provide job shadowing opportunities that allow an intern to learn about the film business under the close and constant supervision of regular employees (with the intern providing minimal or no work), the more likely the activity will be viewed as a bona fide educational experience.

The internship should be of a fixed duration, established prior to the outset of the internship. An employer should avoid using unpaid internships as a trial period to determine whether to hire the intern full time at the conclusion of the internship period. If the intern is placed with the employer for a trial period expecting to be later hired on a permanent basis, the student generally will be considered an employee under the FLSA. Finally, if your intern is later determined to really be an employee, the Act’s minimum wage and overtime provisions carry forward if the intern accepts full employment.

See US DOL Fact Sheet #71 at