Congress has a long history of exempting itself from workplace protection measures. When the Fair Labor Standards Act was passed, Congress exempted itself from coverage. When the Civil Rights Act, including Title VII which protected workers from employment discrimination on the basis of race, color, religion, sex, or national origin, was signed into law, Congress again exempted itself from these protections. It was not until 1995 that Congress passed the Congressional Accountability Act, finally extending workplace protections to congressional staff. However, recent reports of congressional settlements surrounding harassment claims have shown that Congress is not holding itself accountable for workplace protections.

It is no wonder that working people in this country have grown distrustful and frustrated by a Congress more inclined to guard its own interests than ensure workers have the protections they need. At a time when working people face increasing challenges to their ability to enforce their rights through the use of mandatory arbitration agreements and class and collective action waivers, Congress should at the very least adopt policies that empower workers to speak up when they experience a violation of basic labor and employment protections. Nondisclosure agreements can make workers—particularly unpaid interns who by virtue of their unpaid status work in a legal void because most workplace protections are extended based on “employee” status they lack—less likely to report harassment. And, while some congressional offices argue that nondisclosure agreements are needed to protect constituent information, there are ways to protect this information—such as drafting narrowly tailored agreements to do just that and only that—as opposed to using sweeping language that may intimidate workers from speaking out when they experience harassment. Congress may lack the votes necessary for meaningful reform of labor and employment laws, but they can at the very least act as good employers and reform their own house.

At the beginning, the court of public opinion was decidedly against us. Anderson Cooper mocked our lawsuit against Fox Searchlight Pictures, which used unpaid interns on its Black Swan film production, placing it on his “RidicuList.”

But slowly the tide turned our way as more interns spoke up about the long hours they toiled for no pay and receiving little or no benefit in return. The New York Times reported that former interns were pushing back against exploitative internships.  A social media campaign urging companies to #payyourinterns exploded.

The interns’ lawsuits raised a straightforward point: interns who do real work for private companies, whether menial or not, are protected by our nation’s labor laws and, therefore, should be paid at least minimum wage for the hours they work. The fact that many interns are students or work for relatively short durations should be irrelevant. Seasonal and temporary workers must be paid the minimum wage, so why should there be an exception for interns? The fact that some schools grant credit to some interns should not change the calculation either. Course credit is no substitute for pay and, for many interns, paying for the school credit is another out of pocket expense that they can ill afford. In fact, everyone seems to benefit from the transaction more than the interns—schools benefit by reaping tuition dollars without providing instruction and corporations benefit by substituting parts of their paid workforces with unpaid hours.

In the six years since we filed our first case, some employers have taken the high road by changing their practices and starting to pay interns. That is great news for interns and for all workers, because it sends the message that no worker—even someone who is just entering the workforce and desperate to gain experience or who is trying to change careers later in life—is so expendable that our society’s minimum standards do not apply.

Unfortunately, it has been an uphill battle to convince courts that interns are entitled to the same benefits as other workers. In a decision issued recently, a panel of the Second Circuit Court of Appeals affirmed the dismissal of the claims of five unpaid interns who worked for Hearst magazines, although there was no dispute that these interns did work regularly performed by paid employees. Acknowledging that the test it applied to the interns’ claims was a “break from previous tests” it had applied to other types of workers, the Second Circuit confirmed that, at least in New York, Connecticut, and Vermont, interns can “provide a direct benefit to the employer” and still be paid nothing “so long as the intern receives identifiable educational or vocational benefits in return.”

Adding to the problem is that courts have watered down the level of “educational or vocational benefits” that employers must provide so that it means almost nothing at all. One of the interns in the Hearst case was told to “be invisible” when editors were in her presence, and that she should only ask employees questions as “a last resort,” if other interns didn’t know the answer. Another intern worked 10 hour days, five days a week “supervising” other interns and performing manual labor in a “fashion closet” where the magazine stores clothes and accessories. A third “learned” how to use a fax machine and rolodex—in other words, he got the same types of “benefits” any worker gains by doing the work itself, but without pay.

What can interns and their advocates do now to press for their rights? They can urge their schools not to award credit for unpaid internships—many prominent schools like Yale and Columbia don’t, because they believe that work should be compensated and do not want their students to be exploited. Interns can hold employers accountable for failing to offer bona fide training experiences by providing candid assessments to their schools and publicizing poor internship experiences so that prospective interns can effectively weigh their options. Finally, and most importantly, we can all band together and press lawmakers to enact proper workplace protections for interns. A few years ago, some states and cities passed laws that expanded anti-discrimination and harassment protections to unpaid interns, when it became apparent that employee-based anti-discrimination laws may not protect them. These laws should be expanded to ensure that interns who provide direct benefits to employers are paid for their work. In this time of uncertainty among much of the workforce, we need to reaffirm, not abandon, the principle of a “fair day’s pay for a fair day’s work” at the heart of our minimum wage laws.

Rachel Bien is an attorney at Outten & Golden LLP.  She represents workers who have been denied overtime, minimum wages, and other workplace protections under federal and state law.

Congress is not alone in its practice of offering unpaid internships—in fact, far from it. Unpaid internships are common in every sector, and have come to be considered a necessary prerequisite for getting a job—despite the fact that most unpaid internships are actually against the law. The Fair Labor Standards Act (FLSA)—the foundation of modern labor law in the United States—requires that anyone doing work for an employer, including interns, be paid at least the minimum wage.

The Department of Labor (DOL) is tasked with enforcing the FLSA and has developed a six-point test to determine whether an internship must be paid as employment covered by the FLSA or is, instead, training or education. In recent years, in a number of high-profile cases courts have upheld and applied the DOL’s test, and determined that an employer had violated the FLSA when it failed to pay its interns for their work. While Congress is exempted from the laws protecting interns, it sets a powerful example by not paying its interns, and the practice has a far-reaching impact on society as well as public policy.

Nothing is more fundamental than the requirement that employers pay a fair wage for an honest day of work. However, for many young graduates interning this summer, their first employment experience will be working for no pay. Furthermore, because most workplace protections are extended based on “employee” status, unpaid interns will spend the summer working in a legal void if they experience sexual harassment or other conduct that would be prohibited if they were paid employees. Whatever else these young men and women learn, they will learn a powerful lesson about our nation’s system of workplace protections—that we need greater enforcement and tougher penalties for employers that exploit their workforce.

This is where the problem of Congress’ practice of unpaid internships comes into focus. Offering unpaid internships limits opportunities for young people whose families cannot afford to finance the experience, and has policy implications that contribute to the institutionalization of socioeconomic disparities. Often, congressional internships lead to employment in a congressional office. Staff exert influence over policy matters—ensuring that policy staff represent diverse viewpoints and socioeconomic perspectives is critical to promoting policy that serves the interests of majority of Americans.

Consider the American Health Care Act (AHCA), which the Senate is set to consider next week. The House version of the bill included massive cuts to Medicaid, the nation’s public health insurance program for low-income children, adults, seniors, and people with disabilities. 1-in-5 Americans receive health care coverage through Medicaid. Despite the wide reach of the program, it is clear that policymakers in the Republican-controlled Congress do not appreciate its vital importance. Perhaps if more of their policy staff had direct experience with programs like Medicaid, representatives would have a different perspective.

The importance of promoting congressional internship opportunities to young people with diverse background and experiences was recently highlighted in an editorial co-authored by House Democratic Whip Steny Hoyer (D-Md.) and Representative Fred Upton (R-Mich.). Representatives Hoyer and Upton discussed the “College to Congress” program which provides needs-based scholarships to Pell-Grant students so that they can participate in congressional internships that are traditionally unpaid.

Providing financing for internships not only makes them available to less well-off students, it also makes internships more valuable to any student who takes one. The differences in employment outcomes following paid and unpaid internships are striking. A survey conducted by the National Association of Colleges and Employers found that college graduates who had paid internships were more likely to get a job offer, and their salary offers were higher than those received by graduates who had unpaid internships.

Unpaid internships are also a drag on the economy. Students already burdened with ever-increasing student loan debt are forced to cut back their consumption of goods and services in order to participate in unpaid work that they are told is necessary for them to be competitive in the labor market. Even more troubling, unpaid internships undermine the central premise of our nation’s labor and employment law: that you have a right to be paid for your labor. Unpaid work is exploitation. Congress should set an example in this area. This is not just a matter of fairness but a way of ensuring full democratic participation.

• College students who had an unpaid internship did significantly worse than students in paid internships, whether the job was non-profit, state, federal, or for-profit. The job offer rate for graduates who had taken a paid, for-profit internship was 72% vs. 44% for unpaid, for-profit internships (See Figure).
• The NACE survey found that regardless of the sector, unpaid interns received lower salary offers than students who had taken a paid internship.
  
• Most notably, the median graduate who had taken an unpaid internship in a for-profit firm was offered $19,000 less than the median paid intern in such firms.
  

Economic Snapshot

There are other reasons that employers should pay interns, including legal requirements and the fact that students who cannot afford to work for free in the summer are not given the same opportunity to network, as argued recently in the New York Times by Ford Foundation president Darren Walker.

1. Time-and-a-half may not be standard for many today, but it should be.

Current overtime rules provide nowhere near enough protection for workers. The salary threshold of $455 a week, set by the Fair Labor Standards Act, is actually below the poverty line for a family of four. Further, the “primary duty” test to classify an employee as an executive, professional, or administrator who is exempt from overtime is easily manipulated by employers—unless you actually believe that lots of workers officially classified as managers and supervisors make a lot of organizational decisions while mopping floors and stocking shelves.

 The impact on millions of workers and their families is stark. I spoke with “managers” with no control over their own schedules who were forced to work grueling 80 hour weeks with salaries of $35,000 and no overtime pay. Some went months on end without a single day off. Their lives are riddled with stress and anxiety. The time they can spend with family and friends has eroded. One store manager was even prevented from seeing her dying niece—called into work despite having scheduled the day off. These stories, unfortunately, go on and on for far too many American workers.

Thankfully, President Obama has directed the Department of Labor to update its overtime rule. Hopefully this new rule (scheduled to be proposed in November) will at the very least raise the salary threshold to $984 a week and index it to inflation, as proposed by Ross Eisenbrey and Jared Bernstein. Such a change would benefit 5 – 10 million workers. While this would be a modest step forward, ideally the salary test would be raised even higher—Heidi Shierholz found that a $1,122 threshold would be consistent with historic levels.

2. The vast majority of Americans have seen wages lag overall productivity growth. If there’s a single image that will stick in my mind it’s this graph from Raising America’s Pay.

Figure A

From 1948 until the late 1970s, workers’ productivity and wage gains were tightly aligned. But between 1979 and 2013, average hourly productivity increased by 64.9 percent for nonsupervisory and production workers. Meanwhile, these workers’ wages only increased by 8.2 percent. Workers are, simply, no longer reaping the rewards of their own productivity. And this “excess” productivity has to go somewhere, so, while wages have remained stagnant for the average American worker over the past thirty years, CEO pay has boomed. The ratio of CEO-to-worker compensation has risen from 30-to-1 to 296-to-1. And it wasn’t always like this – the post-WWII decades saw much more equal income growth. While society has gotten fairer and more inclusive in lots of ways in recent decades, it has moved backwards in distributing the fruits of economic growth equitably. In order to achieve wage gains and widespread economic growth measures need to be taken to enact strengthened labor standards, raise the minimum wage (and tipped minimum wage), and protect workers’ right to collectively bargain.

3. Low-wage and immigrant workers can’t even count on receiving the wages they’ve legally earned. More than 2 out of every 3 low-wage workers have reportedly been victimized by wage theft—such as failing to be paid overtime, being paid below the minimum wage, having their wages illegally docked, or being forced to work off the clock. And even working for the federal government doesn’t make workers safe—federal contractors are often among the worst violators. Hopefully, yesterday’s executive order will at least reduce this behavior among federal contractors.

4. Work hard and never compromise on the facts. EPI has built an ironclad reputation on the strength of its research. The place that Paul Krugman once called “the little think tank that could” serves as a great example of the impact that can be made by precise economic analysis and a principled belief in social justice.

5. Overall, my time at EPI has taught me that there is nothing more rewarding than fighting to ensure that hardworking Americans get the fair shake they deserve… it’s icing on the cake when in the process you get to work with such incredibly knowledgeable, generous, and truly wonderful people. I can’t thank everyone enough for their mentorship, for putting up with my puns, and for making this summer such a memorable and meaningful experience.

The Fair Labor Standards Act makes most unpaid internships in for-profit businesses illegal because the so-called internships are usually nothing more than employment, with no special educational purpose or structure and no pay. The U.S. Department of Labor has made clear that interns must be paid at least the minimum wage unless the business that hires them meets six criteria:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
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.

According to the National Journal, Clinton, who was addressing an audience at UCLA, “warned there is a “youth unemployment crisis” created by the weak economy they inherited, and stressed the need for more opportunities such as paid job training. She decried—to applause from the audience—businesses that have “taken advantage” of young people with unpaid internships.”

There is no doubt about the youth unemployment crisis, given that the unemployment rate is 21.4 percent for 16-19 year olds and 14.4 percent for workers aged 16-24. But there is a wage crisis as well. The weak economy that Clinton referred to is rewarding all kinds of work more poorly than it used to, and college graduates, who have taken on levels of debt unheard of a generation ago, are feeling real pain. More than 40 percent of recent college grads are underemployed (working in jobs that don’t require a college degree), and more than 20 percent are in low wage jobs.

The unpaid jobs Clinton decried are a special problem. An Accenture report suggests that five percent of last year’s college grads are working in unpaid internships, and I estimate that upwards of 500,000 college students are working without pay at any given time. This obviously contributes to declining wage offers for young people who manage to get paying jobs: When there’s a large pool of educated workers willing to work for nothing, employers know they can keep their salary offers low and still attract candidates.

Hillary Clinton is right to speak out against the exploitation of young workers. I was very encouraged to note that the president’s budget request for the Labor Department includes an additional 300 investigators in the Wage and Hour Administration, the agency that enforces the FLSA and the minimum wage requirement. I hope the Obama administration will take Clinton’s lead and use more of its enforcement resources to protect young workers from this widespread form of wage theft.

But the column takes an abrupt turn when Carr describes the experience of The Atlantic Media, which ended its practice of hiring unpaid interns soon after the Labor Department issued a Fact Sheet declaring most unpaid internships at for-profit companies illegal. The Atlantic began paying its interns (Carr doesn’t mention that it provided backpay to previous interns who had been unpaid) rather than doing away with internships altogether. It created year-long fellowships involving mentoring and education, substantive work, and honest compensation. Far from suffering financially, the company has thrived. The fellows are diverse, smart, creative, and bring new energy to the company.

Unpaid interns are usually another story. They’re mostly from the income strata in our society where families have enough resources to support them. As Carr writes, “Unpaid internships typically provide people who already have a leg up a way to get the other leg up.” They also tend to discriminate against minorities. Carr describes his experience at the Washington City Paper in the 1990s, where paid internships and entry-level jobs brought in a talented group of young black writers who might never have launched their careers there if the paper hadn’t been willing to pay them.

Ultimately, Carr argues that the print media companies need to change their ways and treat their employees/interns as valuable assets, “creating meaningful internships and funding them.” Carr makes a good case that “Bringing on young people from all kinds of backgrounds is less a moral nicety than a business imperative.”

Lapidos made an important point about what’s needed to change the culture that makes this exploitation seem OK. A recent spate of lawsuits has brought the law to the attention of many employers for the first time, and it is dawning on some of them that there is a risk to cheating young workers out of the minimum wage. But interns looking for references for their resumes are unlikely to sue, and most cases–even if meritorious–don’t involve enough back pay to be worth a private lawyer’s time. What’s needed is energetic enforcement by the U.S. Department of Labor and the various state departments of labor. Very little effort would be required to make a difference. If investigators scanned Craigslist they could find plenty of cases to prosecute, and with appropriate publicity and media attention it wouldn’t take long for employers to catch on and clean up their act.

As Lapidos put it, “proper enforcement of labor law shouldn’t depend on exploited interns’ willingness to suffer through courtroom ordeals.” That’s what we pay government lawyers for.

The need for such a program is clear. Paid internships are increasingly important to the ability of college students to gain skills, make professional connections, and find jobs after graduation. As Rep. Bonamici says in the bill’s “Findings” section:

• Many students struggle to make ends meet; 66 percent of young community college students dedicate more than 20 hours a week to an outside job, and the need of many students to maintain a part-time or full-time job reduces or eliminates the time available for an internship.
• Internships often require significant time commitments or temporary relocation, which many students are unable to afford; these additional living expenses include housing, meals, and travel, and these costs make unpaid internships with employers like non-profit organizations and government even more inaccessible for those with low and middle incomes.

Unless we want to exclude students from low-income and middle-income families from important opportunities to participate in government, to make important connections, and to get their foot in the door for future paid employment opportunities, it is particularly important that we provide a means of supporting them financially while they work in government internships. This is not just a matter of economic justice but a way to ensure full democratic participation and to combat economic elitism.

For a typical 10-week summer internship in Washington, DC, working in a congressional office, the Opportunities for Success Act would pay each intern up to $5,000, depending on the costs incurred. For internships taken while the student is enrolled during the school year, the program would provide the higher of the state or federal minimum wage.

In 2010, two of EPI’s research assistants, Alexander Hertel-Fernandez and Kathryn Anne Edwards, published a similar proposal, a $500 million a year Student Opportunity Program, designed to level the playing field for low-income students who take internships in government. Like Rep. Bonamici, Edwards and Hertel-Fernandez recognized that many students are unable to take internships in federal government offices, from Congress to the White House, because they cannot afford to forego a paying job and cannot afford to pay the costs of transportation to Washington, DC, let alone the costs of meals and housing in the DC metro area. The $500 million initial funding level of their program would support about 80,000 internships a year.

Providing financing for internships is not just a way to make them available to less well-off students. It is also a way to make internships more valuable to any student who takes one. There is a world of difference in the employment outcomes between paid and unpaid and internships. According to two years of surveys of recent college graduates conducted by the National Association of Colleges and Employers, the college grads who had paid internships were far likelier to get a job offer and their salary offers were much higher than those received by grads who had unpaid internships. Only 37.8% of students who took unpaid internships at for-profit employers received job offers, while 61.5% who had paid internships got offers. In fact, students who took unpaid internships received lower average salary offers than students who never had an internship of any kind. By that measure, students who take unpaid internships seem to be damaging their employment prospects.

I salute Rep. Bonamici for addressing this problem and hope she finds a Senate co-sponsor so her proposal can get a hearing in Congress.

The judge, following a ruling made 15 years ago by then district court judge Sonia Sotomayor1, upheld and applied the Department of Labor’s six-part test for determining whether an internship is employment covered by the Fair Labor Standards Act or is, instead, training or education that can illegally go unpaid.

Congratulations are due to Eric Glatt, the lead plaintiff, who has become a leading activist in the fight against the deregulation of wages and the spread of unpaid labor. And congratulations, too, to the law firm of Outten and Golden, which represents Eric Glatt and plaintiffs in several cases that challenge the new sense of entitlement employers have to ignore the law and treat employees like serfs. Increasingly, trial lawyers are on the front lines of the fight to protect the dignity of work and the rights of labor. As state and federal agency budgets are cut the role of trial lawyers is growing in importance.

Judge William H. Pauley III had little trouble cutting through the muck of the defendant’s argument that really, the arrangement was voluntary and for the benefit of the unpaid workers rather than the corporation. The fact that Fox Searchlight cut its paid staff as it ramped up its hiring of interns was, by itself, proof that the relationship was illegal. But Judge Pauley also easily disposed of the most frequently heard argument in favor of letting employers off the hook for wages—the claim that the arrangement was for the benefit of the “interns” because they got experience and references for their resumes:

“Undoubtedly, Glatt and Footman received some benefits from their internships, such as resume listings, job references and an understanding of how a production office works.But those benefits were incidental to working in the office like any other employee and were not the result of internships intentionally structured to benefit them. Resume listings and job references result from any work relationship, paid or unpaid, and are not the academic or vocational training benefits envisioned by this factor. On the other hand, Searchlight received the benefits of their unpaid work, which otherwise would have required paid employees. Even under Defendants’ preferred test, the Defendants were the “primary beneficiaries” of the relationship, not Glatt and Footman.”

This decision could be a turning point in the battle to prevent the erosion of labor standards in the United States. Truly, nothing is more fundamental than the requirement that employers pay a fair wage for an honest day of work, but this 75-year old law is being chipped away at by corporations, along with colleges and universities that benefit from up to a million unpaid internships a year.

These unpaid internships are a drag on the economy, as students already burdened with student loan debt are forced to cut back their consumption of goods and services. The rise of unpaid work is lowering expectations for young workers, and it has infected the adult, non-student labor market as well, as the Fox Searchlight case demonstrates. Eric Glatt is a forty-something, not a twenty-something.

Endnotes

1. Archie v. Grand Cent. P’ship, 997 F. Supp. 504, 532 (S.D.N.Y. 1998).