Avoiding the Black Swan: Part II

This is the second installment of a three part series on the history, the legality, and the uncertain future of unpaid internship in the arts and culture sector…

A Legal Framework for Internships

In light of recent legal challenges to the internship status quo, many corporations and charitable organizations are sure to re-evaluate if their internship programs are complying with the law, if paying their interns is economically feasible, and whether unpaid internships are too much of a liability. In preparation for this article, I spoke to Sergio Muñoz Sarmiento, a lawyer specializing in the arts, who acknowledges the murky legal waters where unpaid internships are concerned, particularly unclear for not-for-profits who are legally permitted to have volunteers, students, and trainees:

• There is no section of the Labor Law that exempts “interns” at not-for-profit organizations from minimum wage requirements. What are usually considered “interns” may fall under categories such as volunteers, students, trainees or learners. A not-for-profit would be well-advised to check with an attorney to see if any non-paid workers qualify under one of these three categories.
• For example, with volunteers, the employer does not have control over the volunteer’s schedule and may only suggest or request certain activities performed i.e. A volunteer at a soup kitchen cannot be punished for missing a shift, nor can they be mandated to perform any task they do not voluntarily offer to perform, such as lifting heavy boxes. In general, students are exempt from state minimum wage requirements if they work for an organization organized and operated exclusively for charitable, educational, or religious purposes and they attend an institution of learning leading to a degree.

If the worker does not fall into one of these three categories, Mr. Muñoz Sarmiento advises not-for-profit groups to ask themselves, “Who benefits most from this relationship, the organization or the intern?” If it’s the organization, then that intern should be paid and be treated as an employee. Not-for-profits should remember that under the U.S. Department of Labor’s Fair Labor Standards Act,

internships should primarily benefit the intern, that intern labor should not displace regular employees and that the organization’s operations can be, and often are, impeded by the internship.

Mr. Muñoz Sarmiento offered the following helpful scenario:

• A film company has hired Jane as an unpaid intern. They ask her to read 50 screenplays and organize them by which ones merit further interest, and which ones should be rejected. The fact that this work is entry-level and menial does not negate the fact that reading 50 screenplays is labor, and that the film company probably would have had to pay someone to read these screenplays had it not been for their unpaid intern. This is unlawful and Jane should be paid for her labor.
• Carla works at the film company and has already read the 50 screenplays and organized them by merit. Carla instructs Jane on what to look for in a screenplay and instructs her to repeat the labor that Carla has already done in order to teach Jane how to choose a screenplay for production. In this scenario the primary benefit is clearly with Jane the Intern, and it is lawful and appropriate to treat Jane as an unpaid intern.

It should also be noted that similar to The Charlie Rose Show, who settled with former interns that brought suit against the longtime PBS program, sole proprietorships/LLCs/Partnerships/etc. that are fiscally sponsored by a not-for-profit organization are treated as for-profit entities by the law. In terms of labor law, a charitable organization’s 501(c)3 status does not extend to the activities of its sponsored projects. Because labor laws vary widely state by state, it is important that fiscally sponsored projects seek out the advice of an attorney to determine whether or not any interns or volunteers to their projects should be compensated.

Legal Advise Disclaimer: In preparation for this series, Fractured Atlas consulted with a lawyer to provide background on the legal issues surrounding unpaid internships. Fractured Atlas itself, does not provide legal advice regarding labor law and readers with specific questions should seek the counsel of a lawyer, such asVolunteer Lawyers for the Arts or Sergio Muñoz Sarmiento.

Be sure to catch the final installment of this three part series on unpaid internships, next monday. If you missed part I, you can find it here.