Law Firms Can Bill Out Unpaid Labor Because Why Not Make Money For Nothing?
The New York State Bar Association tells lawyers to go right ahead and bill for that unpaid employee.
‘Thanks, kid!’
When the Second Circuit decided to rewrite all the rules about unpaid internships to gut the Department of Labor and functionally strip interns of effective redress by taking class certification off the table, it was only a matter of time before enterprising lawyers tried to turn this abomination into a cash grab. And now, in a craven act of self-(non)regulation, lawyers have the green light to literally make money for nothing.
In Ethics Opinion 1090, the New York State Bar Association declared its firm belief that there’s nothing ethically wrong with turning a profit off unpaid workers. In the hypothetical considered by the NYSBA, the student must be receiving academic credit for the work — which is something — but ethically they feel that’s the only check on firms billing out free labor. Since the firm doesn’t even have to contribute to the school offering the credit, that there is an infinite profit margin. Congratulations!
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While mentioning the 2010 standards from the U.S. Department of Labor prohibiting a private-sector employer from deriving an immediate advantage from an intern, the bar’s Committee on Professional Ethics also noted that the standard was rejected last year by the Second Circuit.
Well, true. Except they replaced it by prohibiting a private-sector employer from deriving the “primary benefit” from the unpaid intern and then parroted back the exact same test that applied before the decision so we should pump the brakes on characterizing that decision as “rejecting” the standards. Regardless, even under the “new” test, it was already a tenuous enough argument to suggest that the labor of unpaid employees weren’t inuring to the primary benefit of their employers, but allowing the employer to get paid for the labor of unpaid workers seems to massively tilt the balance in favor of the employer.
Opinion 1090 muses:
“Whether the charge for a given service, such as the service of a paralegal, recent law school graduate or law clerk, to all of which a student-intern may be likened, is a fee or an expense is a question that need not be resolved in order to answer the present inquiry,” the committee said. “We note, however, that courts have in some instances treated the charges for the services of paralegals as fees.”
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The problem, of course, is that the fact that the student-intern “may be likened” to actual, paid employees is one of the traditional ways we knew that an internship could not be unpaid. Whether one applies the six-factor balancing test of the Department of Labor or the seven-factor balancing test the Second Circuit made up to mirror the original test (but without affording the Department of Labor any presumptive authority to interpret it), when an intern is displacing the work of a paid employee then they probably need to be paid.
As groin kicks to workers go, this isn’t the most painful. The opinion doesn’t directly expand the power to abuse interns after all. But it does open the door to more parasitic arrangements by giving firms that extra incentive to find a willing co-conspirator in academia. Is the term “co-conspirator” too harsh? Well, consider the equation this opinion sets up: a school takes a student’s money for credit and then — in lieu of expending money teaching the kid in a classroom with an actual faculty member — sends the student to work for a firm who then collects revenue off the work. Everyone expands their profit here except the student who, remarkably, pays for the whole exchange. And here you thought there was no such thing as a free lunch after your summer associate year.
Unbelievably, staying in bed for the entire 3L year while an abysmal law school takes your money is starting to look like the least exploitative option.
NY Firms Can Bill Unpaid Interns’ Work, State Bar Says [Law360]
Earlier: Second Circuit Takes Firm Stance On Educational Value Of Being Poor
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