An Overview of Legal Issues Surrounding Undergraduate Student Internships

1. An Overview of Legal Issues Surrounding Undergraduate Student Internships Joanna Carey Cleveland, Associate University Counsel Kara Simmons, Associate University Counsel September 19, 2013

2. Context of Today’s Conversation • Managing student internships is an ongoing exercise in balancing: • our students’ interests in thoughtfully and productively exploring professional/service opportunities, with • the University’s interest in assuring appropriate academic standards are in place, providing opportunities to translate learning into useful real world experience (and opportunities), and not inadvertently assuming legal risks for the students’ activities, and • the third-parties’ interests in identifying talent, (perhaps) minimizing costs/legal exposure, and (perhaps) providing some learning experiences. • We want to highlight some legal and policy issues associated with unpaid internships along with awarding (or not) academic credit.

3. When Academics and External Internships Intersect: Identifying Opportunities and Risks Issues to consider: • What are the participation/work expectations for the student? • Is it more like a job or like an academic endeavor? • How are learning measures incorporated? • How is the student’s participation/work monitored and evaluated? • Who is responsible for the student’s behavior at the internship site? • How is that described or otherwise detailed? • What if the student is subject to harassment or discrimination at the internship site? • What if the student is injured while participating/working at an internship? • What happens when the student cannot or does not complete the internship? • Does the University have an obligation to find an alternative?

4. Current Legal Focus:Wage-Hour Issues • The Fair Labor Standards Act (“FLSA”) is a federal law that broadly defines employee and sets out requirements for minimum wage and overtime pay eligibility • It is enforced by the Department of Labor (“DOL”) • DOL is focusing attention on employers who are trying to avoid the minimum wage requirements set out in the Fair Labor Standards Act (“FLSA”) by calling assignments ‘internships’ rather than traditional jobs • The U.S. Department of Labor is more aggressively reviewing these arrangements and penalizing employers who are not properly classifying individuals as employees • Interns themselves are more active in filing administrative complaints and lawsuits

5. What are the legal standards for unpaid internships? DOL has developed a six-factor review in determining whether unpaidinternship programs are permissible under the FLSA, as follows: • The internship, even though it includes actual operation at the facilities of the employer, is similar to training which would be given in an educational environment. • The internship experience is for the benefit of the intern. • The intern does not displace regular employees, works under close supervision of existing staff. • Employer that provides training does not derive an immediate advantage from intern’s activities; operations may actually be impeded. • Intern is not necessarily entitled to a job at the conclusion of the internship. AND • The employer and intern understand the intern is not entitled to wages for time spent interning.

6. Evaluation of the DOL 6-factor test • ALL SIX CRITERIA MUST BE MET FOR THE DEPARTMENT OF LABOR TO AGREE THAT: • The opportunity is an extension of the educational program, and • That the program is designed to provide students with professional experience in furtherance of their education. • Otherwise, the individual will be considered an employee.

7. Other guidance from the Department of Labor • Internships in the “for-profit” private sector will most often be viewed as employment, therefore interns typically must be paid at least minimum wage, even when they are receiving academic credit. • Unpaid internships in the public sector or for a non-profit organization where the intern volunteers without expectation of compensation are generally permissible. • 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. • This most often occurs when a college or university exercises oversight over the internship program and provides educational credit.

8. Other Legal Issues • While the wage-hour issues affect the third-party site, if the University is exercising oversight of a student or directing a student to a particular educational program or activity, then we may also face potential responsibility or liability for: • the student’s actions at the site, • any injuries or harm suffered by the student (including harassment, sexual misconduct, discrimination), and/or • face complaints about breach of contract if the terms of the internship are not met.

9. Current Academic/Institutional Focus:Other issues related to providing academic credit (for paid or unpaid internships) • Does the student have to pay additional tuition (while maybe not being paid for the experience)? • Is the institution providing sufficient academic oversight and feedback and establishing clear expectations for internships that qualify for academic credit? • Is that oversight consistent? Are there opportunities for improvement? • Does it meet accreditation requirements? • Has the purpose of the internship been sufficiently tied to the pedagogical goals of the academic program? • Does the instructor/faculty member have to visit the site? Communicate with the site supervisor? • What is required by the University for the ‘experiential education’ general education requirement? • How is an internship experience evaluated for this purpose? • Hoe are learning experiences developed, documented, and/or provided? • What are individual Schools or degree programs requiring? • Different liability issues and concerns for the University when we require an internship/rotation/offsite experience. • Vetting of sites becomes more important. • Have we defined expectations clearly with the student and the site?

10. Final Thoughts • University considerations are many in this context • Internships in the for-profit sector that are unpaid are more likely to violate the Fair Labor Standards Act • Receiving academic credit alone is probably not enough • Need to demonstrate a formal educational structure that goes with the internship • The intern needs to receive more from the internship than the company • Internships in the public sector or for a non-profit are less of a wage-hour liability concern (but may still present other risks) • Recent cases do not necessarily mean universities have to change how they handle internships (yet) • Outside entities may start distancing themselves from internships, which would affect UNC-CH • The more active an institution is during the internship, the better (but note that doing so may increase the university’s liability risks) • Going forward: • internship arrangements and expectations may change with more litigation • more students demanding (and receiving) pay, possibly in addition toacademic credit

11. Related Links • DOL Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act • http://www.dol.gov/whd/regs/compliance/whdfs71.htm • June 24, 2013 article in The Chronicle of Higher Education, “Colleges Draw Criticism for Their Role in Fostering Unpaid Internships” • http://chronicle.com/article/Colleges-Draw-Criticism-for/139977/ • August 2, 2013 article in Inside Higher Ed, “Unpaid Internships Not Dead Yet” • http://www.insidehighered.com/news/2013/08/02/officials-skeptical-unpaid-intern-lawsuits-will-affect-higher-education • SACS COC Principles of Accreditation (Standard 3.4.4) • http://www.sacscoc.org/pdf/PrinciplesOfAccreditation.PDF

12. Thank you! QUESTIONS?