Not long ago we warned you about the risks involved with unpaid interns. Last week another company, Warner Music Group (which includes Atlantic Records) felt the blow. Warner must defend itself in a nationwide lawsuit against 3,000 potential plaintiffs. And it all started with one intern…
After an unpaid internship with Warner as a student, a former intern lawyered up to argue that Warner misclassified him as an unpaid intern – thereby treating him as exempt from minimum wage and overtime requirements. As an intern he worked approximately 50 hours per week but received no compensation. Although he was a student at the time, he received no academic credit. Even worse for Warner, the unpaid interns "performed some of the same work as paid employees."
The former intern argued this misclassification was no mistake. He argued it is part of a nationwide employment policy that governs internship programs at all of Warner's locations. The intern alleged that the employer improperly classified him and 3,000 other students as unpaid interns. After hearing evidence on the matter, the court concluded that a collective action was appropriate.
You don't have to be a math whiz to see the financial penalties Warner will face in this lawsuit. All misclassified interns will be entitled to backpay: 3,000 interns working around 50 hours a week (even at minimum wage) adds up. It gets better for the interns. In FLSA actions, the backpay may be doubled as a penalty. And if the plaintiffs win, they will also collect their attorneys' fees .
So do yourself a favor and review your internship program and policies for compliance with wage and hour law. For the two key factors, read my recent post: Should You Be Paying Your Unpaid Interns? Trust me. Even if you do not have 3,000 interns, you don't want to see one of these lawsuits