With the Kentucky Derby less than a month away, we have a trifecta of unpaid internship developments for you:

  • First, On April 4th, the U.S. Department of Labor filed an amicus brief with the Second Circuit Court of Appeals, arguing in support of the Hearst unpaid interns, who are appealing the Southern District of New York’s May 2013 denial of class certification for their minimum wage and overtime allegations. 

In its brief, the DOL told the Second Circuit that the District Court in Hearst used the wrong test for determining whether an intern is an employee under wage and hour law. The DOL urged the Court to apply its own 6-part test rather than the “totality of the circumstances” or “primary benefit” test when evaluating whether or not interns should be paid.  The brief stated that the “subjective” totality of the circumstances test would make it “more difficult for both employers and interns, as well as courts, to determine whether interns are employees entitled to the protections of the FLSA.” 

The DOL also argued that its own test “allows employers, interns, and adjudicators to determine in an objective manner whether there is an employment relationship as broadly defined by the FLSA, thus best reflecting the economic reality of the situation [and] should therefore be [the test] adhered to strictly absent unusual circumstances.”

Stay tuned for oral arguments on this appeal, which is being held in tandem with the Fox Searchlight unpaid internship case.

  • Second, Viacom now faces a conditionally certified class of unpaid interns alleging minimum wage violations, also in the Southern District of New York.  U.S. District Court Judge Jesse Furman ruled last week that although the question was a “close one in some respects,” the opt-in plaintiffs met their low burden to show that they were “victims of a common policy or plan that violated the law” where the group had simply taken roles that would replace paid workers by using unpaid interns.  This decision will likely give the plaintiffs’ bar confidence that future unpaid internship lawsuits will clear the initial FLSA hurdle, and enable them to apply pressure on employers.
  • Third, reports have surfaced that Conde Nast has settled its own unpaid internship lawsuit, filed in June 2013, also in the Southern District of New York.  In response to the lawsuit, the publisher terminated its internship program this past October.  A settlement would come hot on the heels of Elite Model Management’s $450,000 unpaid internship settlement this January, and would set an important benchmark for future payouts.

Given these developments, any employer using unpaid interns should closely evaluate its program in order to ensure compliance with the law, and to avoid costly and time-consuming litigation.