When Are Unpaid Internships Illegal in Tennessee?

When Are Unpaid Internships Illegal in Tennessee?

Internships have been a popular and effective way for young professionals to gain invaluable real-world experience in the industry of their choice, especially during busy academic careers. While internships can offer aspiring employees and students the needed opportunity to beef up their resumes and learn new skills, the controversy surrounding unpaid internships has been a longstanding debate in the U.S. for years.

State-specific nuances in employment law can make it tricky for Tennessee workers to understand the regulations pertaining to internships, especially for young professionals who are still acclimating to the professional sphere and establishing themselves in the U.S. workforce.

When are unpaid internships considered illegal in Tennessee? Keep reading to learn more about unpaid internships and associated employer violations.

Unpaid Internship Laws in Tennessee

Regardless of age or industry, it’s critical for hardworking professionals to know their value and request the amount of compensation they’re rightfully entitled to. As you can imagine, this can be especially difficult for interns, who are often young, ambitious, and eager to make their mark on the world.

While an earnest work ethic is never a bad thing, it’s equally important for interns to assert their employee rights when needed to discourage employers from taking advantage. While unpaid internships are technically legal in Tennessee, they must meet specific criteria to qualify, making it all the more crucial for interns to understand the laws governing paid vs. unpaid internships.

The Fair Labor Standards Act (FLSA)

When it comes to unpaid internships, there is one federal law that’s absolutely vital to understand: the Fair Labor Standards Act (FSLA). This federal act establishes various aspects of employment, including minimum wage, overtime, recordkeeping, and youth employment standards according to the U.S. Equal Employment Opportunity Commission (EEOC).

The FLSA provides guidance on unpaid internships through the U.S. Department of Labor's Wage and Hour Division. Under these regulations, an unpaid internship must meet specific criteria to be considered lawful under the FLSA. This federal act outlines various guidelines for unpaid internships, including:

1. Unpaid internships must be educational – To be legal, the primary purpose of the internship must be to provide the intern with educational and vocational training. The experience must be similar to what they would encounter in an educational environment.
2. The unpaid intern must be the primary beneficiary – Unpaid internships are only lawful if the intern receives significant educational value from the experience, gaining practical skills and knowledge related to their field of study.
3. Unpaid internships cannot displace regular employees – The intern's work should not replace or displace that of paid employees, nor should the intern be used as a substitute for hiring additional staff.
4. Employers cannot derive any immediate advantage from unpaid internships – The employer should not derive an immediate advantage from the intern's work. In some cases, the intern's activities may even impede the employer's operations or require supervision and training.
5. No entitlement to wages – The intern and the employer should have a clear understanding that the intern is not entitled to wages during the internship period.

For unpaid internships to be lawful in Tennessee, they must meet all of the above criteria—otherwise, the internship may be illegal under FLSA regulations. If the latter applies, the intern may be classified as an employee entitled to minimum wage and overtime pay, in which case the employer may be held liable for workplace violations, such as employee misclassification and wage and hour claims.

If you’re concerned about the legality of an unpaid internship, it’s crucial to consult with an experienced employment law attorney as soon as possible to discuss the unique circumstances of your case and determine the most effective legal strategy to employ on your behalf. Luckily, our firm has the legal knowledge and experience to help employees initiate their claims and take the first step toward demanding the compensation they rightfully deserve. Contact us online to request a free consultation.

Determining the Primary Beneficiary in Unpaid Internships

As outlined in the FLSA, a foundational component of lawful unpaid internships is the primary beneficiary. In other words, an unpaid internship is only considered legal when this role is occupied by the intern, not the employer.

Like many aspects of our justice system, determining the primary beneficiary is rarely simple. More often than not, the primary beneficiary test entails a high level of subjectivity, which can permit unethical employers to take advantage of young workers who are willing to work hard without receiving a paycheck in return.

The Primary Beneficiary Test

In 2018, the U.S. Department of Labor (DOL) established a 7-part test to establish the primary beneficiary in unpaid internships. Keep in mind that this test only applies to internships at for-profit companies. The primary beneficiary test is widely used by courts to determine whether an intern or student is an employee under the FLSA. It entails the following 7 factors:

1. The nature of the internship: The extent to which the internship provides educational training and learning opportunities that are similar to those provided in an educational environment.
2. The purpose of the internship: Whether the internship experience is primarily for the benefit of the intern's educational or vocational development.
3. The connection to the intern’s education: Whether the internship is integrated into the intern's formal education program by providing academic credit, fulfilling educational requirements, or aligning with specific coursework.
4. The duration of the internship: The length of the internship should be designed to provide the intern with adequate training and learning opportunities.
5. The role of the internship in relation to the intern's education: The extent to which the internship accommodates the intern's academic commitments and complements their educational goals.
6. The accommodation of the intern's academic commitments: Whether the internship allows the intern to continue their education, such as by allowing time for attending classes, completing assignments, or participating in other educational activities.
7. The understanding between parties: The clarity and understanding between the intern and the employer regarding the intern's unpaid status and the absence of entitlement to wages during the internship.

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