The question presented is the legal propriety of hiring an unpaid intern. That intern is in the country under J-1 Visa. As an example, assume the job capacity is working as a front desk receptionist. The intern is perfectly willing to work under those conditions, so the only question is whether any problems will be encountered by the local Labor Commissioner.
Bottom line: Hire this individual as a regular employee with minimum wage. Not as an unpaid intern. There is nothing in the J-1 program that prevents the intern working part-time for pay, especially since one of the requirements is the ability to financially support themselves while the US.
Fact Sheet 71 from the US Department of Labor (see attached) lays out the rules to be followed in such situations. There are seven factors to consider, but the following seem to be the most significant to our case:
- Does the internship provide training similar to that given in an educational environment? Answer: No. Assume hypothetically the intern is taking an entrepreneur class. Part of the curriculum is how to set up an initial LLC, enter into employment contracts, sign contracts and leases, and the like. The intern works for a small business where he or she gets an insider’s look into operations. This would probably qualify. Or an intern working for Ingersoll-Rand’s graduate training program where they actually receive classroom training on HVAC products in Wisconsin. Frankly, working for the fitness gym at the front desk has little to do with such educational experience. Especially if one is a psychology major.
- Is the internship tied-to the formal education program, including receipt of academic credit? Answer: No. Also assume hypothetically the intern is taking a computer science class in programming. He or she must write a paper as to the basics of programming. That person interns with an IT startup in which he or she is taught programming skills in developing a new product. The intern than writes a paper and gets credit. Again, this would be inapplicable to our case of a receptionist.
The courts use the “primary benefit test”. Namely whether the benefit to the intern (education) predominates over the benefit to the employer (getting free labor). In this case, there is more benefit to the employer.
The first federal cases on the subject is the 2015 New York case of Glatt v. Fox Searchlight Pictures, Inc. It involved the Black Swan film in New York City. College interns were retained ostensibly for work on the film. However, a close examination indicated their work consisted of such things as filing documents, copying, tracking purchase orders, taking lunch orders, making coffee, and answering phone calls. In other words, having nothing to do with the educational experience of making a film. This was important because the interns tended to be film studies majors.
The court held in favor of the employees based upon the above primary benefit test. Here the overwhelming benefit was the employer receiving cheap labor, with the interns getting very little educational benefit. Thus, the employer was penalized for not paying at least minimum wages.
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