Litigation Over Interns Dries Up Internship Opportunities

The natural and probable consequence of litigation over unpaid internships was that such opportunities would disappear because the risk of litigation for even a legitimate program would outweigh the likely benefit. The result of the much-touted Gawker intern litigation underscores that reality.

We’ve blogged about the Gawker intern litigation (Mark v. Gawker Media LLC, Case No. 13-cv-4347 (AJN) (S.D. N.Y.) at least twice before. The lawsuit was originally brought in 2013 by two individuals who had had unpaid internships for Gawker Media, a company that runs blogs like Gawker, Jezebel, and io9. The crux of the claim, like that of most of the recent spate of internship cases, was that the interns were actually employees and entitled to the minimum wage and overtime under the FLSA and state law. The court conditionally certified a class under section 16(b) of the FLSA on August 15, 2014. We discussed that decision here. Later, issues arose regarding the means of providing notice to the class through the broad use of social media, which the court significantly limited. We blogged the court’s decision on those issues here. In addition to the two original plaintiffs, 17 former interns opted in. The parties then filed various cross-summary judgment motions, and the plaintiffs sought certification of a New York state law class under Rule 23.

In a straightforward order, the court dismissed all federal claims on summary judgment and dismissed certain of the state law claims without prejudice.

The court found that only one plaintiff (Mark) had a timely FLSA claim, and those of the other plaintiff and others who opted in were time-barred. All these individuals had stopped working as interns more than three years before they had joined the litigation; thus, the court needed to address only the merits of a single claimant. To resolve that claim, the court did not rely on the Department of Labor’s famous (or possibly infamous) Fact Sheet No. 71 in light of the Second Circuit’s decision in Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528 (2d Cir. 2015), which had largely rejected it. The court in Glatt instead used a nonexclusive list of factors to determine whether the intern or the putative employer was the primary beneficiary of the relationship. Under the Glatt test, it looked at these issues.

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements rather than displaces the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

In the Glatt case, the court found that the individual nature of this inquiry precluded class certification under both Rule 23 and the FLSA. The court in the Gawker litigation found no reason to reach that issue, as the inquiry reflected that the sole remaining plaintiff with a federal claim was properly classified as an unpaid intern. It found that he understood he would not be paid, received hands-on training, was given weeks and guidance to produce an article that an employee would be expected to write in two days, and received school credit for his internship time. Sadly, one factor potentially supporting intern status was that the company ultimately stopped providing internships because “the cost of managing interns in time and effort outweighed the benefits.” The court dismissed the remaining state law claims by declining to exercise its supplemental jurisdiction.

Certainly internships should not be used for the purpose of securing free labor, but the example of these high-profile cases reflects a much more mixed reality. In Glatt, at least some of the interns produced evidence that they did little more than run errands and fetch coffee for those working on the movie Black Swan, but even then the Second Circuit ultimately concluded that the claims could not be resolved on a class-wide basis. The lead plaintiff in the Gawker litigation seems on the surface to have had a valid and even rewarding internship experience, but he still dragged the employer through years of litigation and bad publicity. The net result of these cases, however, is that internship opportunities are disappearing due to the litigation risk. Indeed, ironically, the best internships are the most vulnerable because the employer must weigh the litigation cost against a negligible benefit.

The bottom line: Class action internship litigation has done more to eliminate internships than to address any abuse by putative employers.