Unpaid Externships Need Not Cover All Aspects of an Extern's Training, 11th Circuit Ruling Shows

Author: Michael Cardman, XpertHR Legal Editor

To avoid having to pay the minimum wage to an extern, an employer must among other things provide training similar to that which would be given in a vocational school.

An employer can satisfy this Fair Labor Standards Act (FLSA) requirement even if its externship focuses on one small aspect of the extern's schooling, the 11th Circuit Court of Appeals ruled on January 22. Kaplan v. Code Blue Billing & Coding, +2013 U.S. App. LEXIS 1433 (11th Cir. 2013).

The lead plaintiff in the case was a student in a medical billing and coding school. She enrolled in an externship at a local for-profit medical billing corporation to fulfill a graduation requirement.

There she spent about 80 percent of her time calling insurance companies to follow up on the status of claims. She said she could not apply what she was learning at school because she spent most of her time on this single aspect of medical billing. As a result, she argued, the externship did not satisfy the requirement that her training be similar to that given in a vocational school. Therefore, she claimed, she was not an extern but an employee entitled to back wages under the FLSA.

The United States District Court for the Southern District of Florida dismissed her case, noting that submitting claims to insurance companies was in fact part of her schooling and that "there is no requirement" that an externship involve all aspects of the topic being studied.

The externship also satisfied the other requirements necessary for it to be unpaid, the district court held. Specifically:

  • The externship was for the benefit of the extern because she received academic credit and satisfied a graduation requirement;
  • The extern did not displace regular employees and worked under the close supervision of her boss who was usually just "a few feet" away;
  • The employer received no immediate advantage from the activities of the extern and, on occasion, even had its operations impeded by the necessity of guiding the extern's work;
  • The extern freely acknowledged that she was not entitled to a job at the conclusion of the training period; and
  • The extern acknowledged in a deposition that she did not expect to be paid for the externship.

The 11th Circuit found no reason to overturn the lower court's ruling and upheld its dismissal of the case.