Unpaid-Intern Lawsuits Explained

Why are so many interns suing their employers?
It started on June 11, when a federal district court judge in New York ruled that Fox Searchlight Pictures, a film distribution company, should have compensated two unpaid production interns for the 2010 movie Black Swan. The pair had performed basic chores such as manning phones, fetching coffee, and taking out the trash. According to the judge, “Searchlight received the benefits of their unpaid work, which otherwise would have required paid employees.” The victory opened the door for more disgruntled interns. On June 13 a former intern for W magazine and another for the New Yorker filed a lawsuit against publisher Condé Nast claiming they had been paid less than $1 an hour. On June 17 a former Atlantic Records intern filed a lawsuit against Warner Music Group citing unpaid wages for office work performed from October 2007 to May 2008. Eight former magazine interns collectively filed suit against the publisher Hearst in 2011, but the case was dismissed in May because the judge denied its class-action status. Those interns have requested an appeal.

They were just answering phones and doing errands. How much money can they possibly get?
California’s minimum wage is $8 an hour, so it’s not as if the Black Swan interns expect a windfall. According to Juno Turner, who represents the Fox Searchlight Pictures, Condé Nast, and Hearst plaintiffs, these lawsuits are more about fairness than money. Fox has plans to appeal. Both Condé Nast and Warner Music Group declined to comment on pending litigation.

What does the Black Swan ruling mean for other employers?
Companies in the U.S. can legally hire unpaid interns as long as they follow six U.S. Department of Labor guidelines under the Fair Labor Standards Act. The law says that interns cannot “displace regular employees.” It also stipulates that “the employer that provides the training derives no immediate advantage from the activities of the intern.” But Turner argues that unpaid arrangements will disappear in the wake of the verdict: “I think it would be the very rare internship that would meet the criteria that are set forth in this decision.” Allison Cheston, a career coach who teaches a workshop at New York University about how to land your dream job, agrees. “The guidelines laid out by the Department of Labor for internships are pretty strict,” she says. “For most corporations, we’re heading in the direction of internships being paid positions eventually.”

Don’t unpaid internships lead to entry-level jobs?
Yes. According to the National Association of Colleges and Employers, 37 percent of 2012 graduates who worked in unpaid internships received offers of paying jobs. Graduates who worked in paid internships were offered jobs 60 percent of the time.

So did the Black Swan interns make it easier or harder for young workers to break into the workforce?
If companies decide that offering unpaid internships leaves them exposed to lawsuits—and paid internships are too expensive—it could be an unfortunate development for college students willing to do free grunt work. According to Heather Huhman, a career adviser and author of Lies, Damned Lies & Internships, the people filing lawsuits have missed the point. Unpaid internships are opportunities for exposure to the inner workings of business, not money. “A job listed on a résumé wouldn’t impress me just because it was a paid position,” she says. “What matters is the experience you got from that job.”

What about internships for college credit?
“Most of the top schools in the country won’t accept an internship as academic credit anymore,” Cheston says. The Yale University website, for example, says the school “does not award credit for internships. This policy is not unique to Yale; it’s shared by all Ivy League institutions and some liberal arts colleges.” According to Cheston, there’s one type of company that may still get away without paying interns: nonprofits.

Why is that?
The Department of Labor gives nonprofits a free pass, Cheston says, even stating in its own intern guidelines that “unpaid internships in the public sector and for nonprofit charitable organizations, where the intern volunteers without expectation of compensation, are generally permissible.”