Who's Fetching Coffee Now?

The economic downturn has led to a crackdown on unpaid internships. As some update their resumes, others wonder who will make their copies.

Eva Chan, a management major at Case Western Reserve University, did all the right things to score a public relations job after college. She did well in her studies, sent out lots of resumes and worked hard to get real-world experience while still in school. The strategy paid off: Less than a month after her May 2010 graduation, she was in New York working for a major publishing firm.

During her time at Case Western Reserve, Chan had two internships-one at a boutique PR and event production firm in New York and the other at a Cleveland arts organization. Both were unpaid, but Chan pared expenses by staying with family in New York and scheduling the Cleveland internship during the school year so she didn't have to pay for summer boarding.

The arts organization wasn't worth the maneuvering, she says, much less the eight hours a week she worked for free. Chan was supposed to help with event planning, but from the start she was just doing "grunt work."

"I'd go in every Friday, and they'd have things piled up for me to file," she recalls. "All I was doing was a lot of administrative stuff. I didn't have a passion to go in after a while. I like to be on my feet and do something different, not sit by the filing cabinet for tons and tons of hours. It wasn't what I signed up for."

On the other hand, her work-for-free experience at the events firm was immensely valuable. She helped plan a National Urban League conference and organized volunteers for nonprofit fundraisers. The internship, "confirmed my thoughts of what I wanted to do," she says, adding that her boss also gave her an excellent work reference that likely helped her get her current job.

These kinds of inconsistencies in the value of unpaid internships led the U.S. Department of Labor to announce plans to more closely scrutinize them last April. It released a six-part fact sheet clarifying the criteria to determine whether an internship can legally be unpaid.

Under the guidelines, unpaid internships at for-profit companies must—among other things—be for the student's benefit, not the employer's, and include a strong educational component. "The more an internship program is structured around a classroom or academic experience as opposed to the employer's operations," the guidelines state, the more legally legitimate it will be.

And while some gladly agree to students having extra cash in their pocket and more robust experiences on their resumes, others remain on the fence about how the guidelines will affect business and education.

For her part, Chan says she's glad the government is at least starting to pay attention.

"I think it hurts a lot of smaller companies who don't have the budget, but there should be some kind of guidelines around what interns are agreeing to do," she says. "You hear all these stories about interns having to go fetch coffee all day. There should be some protections."

On the other hand, some college administrators have expressed worry in publications including The New York Times and The Chronicle of Higher Education about too much government meddling in what has traditionally been an informal arrangement. And liberal arts majors, who traditionally rely on unpaid gigs for experience, have cautioned that with the new scrutiny, opportunities for "real-world" training could dry up.

Old is the New New

Although they've made headlines recently with the new emphasis on enforcement, the Department of Labor's guidelines, in one form or another, date back to the 1947 U.S. Supreme Court ruling in Walling v. Portland Terminal Company. The Court determined that prospective brakemen enrolled in a weeklong railroad training program were not entitled to pay because the program essentially was run for the trainees' educational benefit, not the employer's profit.

"It was made-up work—not real work—to learn the necessary skills for the job," says Case Western Reserve Law Professor Robert Strassfeld, an expert in labor law. "Part of what the test examines is whether the internship represents the sort of employment where one would normally expect to be paid."

Save for a brief unearthing during the Clinton administration, the six-part test was effectively mothballed until the economy tanked in 2008. With increasing numbers of Americans out of work, the prospect of cash-strapped business owners displacing paid workers with unpaid interns suddenly became increasingly relevant.

"Against a backdrop where there are more and more of these programs—and the job market is so lousy—there is an increasing number of people who are willing to work for no pay," Strassfeld says, emphasizing that business cutbacks have left young workers with fewer options.

The prospect for paid internships has been especially bleak in the past two years. "It used to be, really until the last year or so, that law students—to a very considerable extent—were doing paid work of some sort," says Jonathan Entin, the law school's associate dean for academic affairs. In the past year, however, "we've seen a real surge in these unpaid arrangements."

Within the next year, Entin expects the school will have an expanded externship program in place in which students who do unpaid law-related work will get credit, have university oversight and an educational component to their experience.

For the time being, he's improvising by writing letters that—though not a legal contract—explain the school's ground rules to potential employers. "It basically says, 'Here's the arrangement we have, and here's what the school is prepared to do to show it's a meaningful experience,' " Entin says.

Fairness Above All

Steven Schoenwald, an undergraduate biology and business management major, says too much government oversight might have impeded his on-the-job experiences.

When he was fresh out of high school, Schoenwald took an unpaid internship as an anesthesia research student. Today, similar internships might not pass muster with the Department of Labor, because of duties requiring "monotonous paperwork," he says.

But the experience led to a paid internship that continues today.

He also learned some valuable skills.

"I became so familiarized with anesthesia equipment that I was sent on operating room calls to repair equipment and answer technical questions while surgery was being conducted," he says.

The fix-it knowledge he acquired also helped him start a small business in electronic equipment repair—and allowed him to avoid student loans.

Law professor Strassfeld, however, stresses just because students want—and might even benefit from—an unpaid internship, that doesn't mean the agreement should go unregulated.

"The Fair Labor Act presupposes that sometimes there will be people willing to work for less than a minimum wage," he says. "But it comes down to our sense of a fair labor market in a just society—we won't let people make that choice even if it's a choice they would want."

And there are other issues beyond being paid for work performed. If students are not paid employees, they are not covered by labor-protection laws, Strassfeld says. "You're essentially out there without protection."

Taking Credit

Case Western Reserve students currently do not receive academic credit for internships. In this respect, the university is something of an anomaly, says Thomas Matthews, director of the university's Career Center.

"At Case Western Reserve, we want our students to receive a well-rounded and experiential learning experience," he says.

However, in the absence of strict rules regarding the rigor of internships, he says, there's no guarantee for university officials that students will receive a substantial educational benefit from their work experience.

Lately, though, Matthews has seen "greater receptivity by faculty across the university in terms of the importance of meaningful co-curricular experiences," as well as more serious discussion about the possibility of offering internship credit.

Business and liberal arts students can enroll in a full-time, 14-week practicum that ensures participating students will receive a notation on their transcript-and be subject to some checks and balances built into the requirements to verify the experience's legitimacy. The practicums typically are paid, but not always. Most include a project and mid-semester and end-of-semester evaluations.

Matthews says that, since the Department of Labor announced its approach, he's been more actively coaching employers on their arrangements with students. But setting standards is "easier around the practicum than with internships," he says. "The practicum has certain guidelines, whereas in internships it's the employer and the student's decision to pursue that opportunity or not."

Within the last six months or so, he's also been urging employers to offer a stipend.

"I understand certain organizations may not be able to pay a competitive hourly wage or a salary," Matthews says, "but our recommendation is that if it's career-related, substantive work done by a student for an organization, there should be some recognition of the value that the student brings to that organization."

Value that should not be judged by a student's ability to order a grande, low-fat, with whip, decaf iced caramel latte.