Worthy Exemption? Examining How the DOL Should Apply the FLSA to Unpaid Interns at Nonprofits and Public Agencies

• Author: Anthony J. Tucci
• Position: J.D. Candidate, The University of Iowa College of Law, 2012
• Pages: 1363-1392

1363

Worthy Exemption? Examining How the

DOL Should Apply the FLSA to Unpaid

Interns at Nonprofits and Public Agencies

Anthony J. Tucci

ABSTRACT: The Department of Labor (“DOL”) has recently increased its

enforcement of the Fair Labor Standards Act (“FLSA”) against for-profit

organizations that use unpaid-intern labor by using a six-part test to

determine employment status. This recent effort explicitly excludes nonprofits

and public agencies, even though the FLSA provides no clear exemption for

these types of organizations. However, competing public-policy concerns

might require that the DOL develop a different test to determine employee

status under the FLSA. Policymakers must be cognizant of both the positive

and negative aspects of unpaid internships. For instance, they help young

workers establish a career path and assist nonprofits and public agencies in

providing services. Yet unpaid internships can also lead to harmful

economic effects and stifle social mobility. This Note takes these

considerations into account in proposing a solution that aims to combat the

ills of the unpaid-intern economy while protecting the public’s need for

nonprofit and public-sector services.

I. INTRODUCTION .................................................................................... 1365

II. FINDING GUIDANCE FROM INTERPRETATIONS OF THE FLSA ON

TRAINEES AND VOLUNTEERS ................................................................ 1367

A. THE SIX-PART PORTLAND TERMINAL TEST FOR TRAINEES AND

UNPAID INTERNS AT FOR-PROFIT ORGANIZATIONS ........................... 1367

B. THE FLSA AND UNPAID VOLUNTEERS AT NONPROFIT

ORGANIZATIONS ............................................................................. 1370

C. AN EXCEPTION FOR UNPAID VOLUNTEERS AT PUBLIC AGENCIES ........ 1373

 J.D. Candidate, The University of Iowa College of Law, 2012; B.A., The University of

California, Santa Cruz, 2007. I would like to thank Professors William G. Buss and Marc Linder

for their thoughtful comments on this Note; Professor Todd E. Pettys for his sage and calm

counsel as faculty advisor; the student writers and editors of Volumes 96 and 97 of the Iowa Law

Review, especially Carolyn Mutrux, Mike Curtis, and Ellie Tennyson for their thorough edits of

this Note; and my family for their constant support.

1364 IOWA LAW REVIEW [Vol. 97:1363

III. COMPETING POLICY INTERESTS IN REGULATING UNPAID

INTERNSHIPS IN THE NONPROFIT AND PUBLIC SECTORS...................... 1374

A. NATIONAL CALL FOR PUBLIC SERVICE ............................................. 1374

B. BENEFITS OF UNPAID INTERNSHIPS TO STUDENTS ............................. 1376

C. DESPITE BENEFITS, UNPAID INTERNSHIPS HURT THE ECONOMY........ 1378

D. THE UNPAID-INTERN ECONOMY STIFLES SOCIAL MOBILITY FOR

LOW-INCOME STUDENTS ................................................................. 1381

IV. ADOPTING MODIFIED TESTS FOR NONPROFIT AND PUBLIC-AGENCY

INTERNSHIPS ........................................................................................ 1384

A. APPLYING A MODIFIED PORTLAND TERMINAL TEST TO

INTERNSHIPS AT NONPROFITS ......................................................... 1384

1. Adding a Limited-Service Exemption ................................. 1384

2. Hypothetical Internship Under the Limited-Service

Exemption ............................................................................ 1386

B. A MODIFIED PORTLAND TERMINAL TEST FOR UNPAID INTERNS IN

THE PUBLIC SECTOR ....................................................................... 1388

1. Reconciling the Need for Rules and § 203(e)(4) of the

FLSA ...................................................................................... 1388

2. Hypothetical Internship at a Public Agency ....................... 1389

C. IMPLEMENTING THE TESTS ............................................................. 1390

1. Implementing the Modified Portland Terminal Tests

Through the DOL and the Courts ...................................... 1390

2. Congressional Action ........................................................... 1391

V. CONCLUSION ....................................................................................... 1391