The use of unpaid interns is a common practice in many industries which has increasingly come under fire. A tentative deal reached by NBCUniversal Inc. to pay $6.4 million to settle its intern suit highlights that employers should be careful how they utilize unpaid interns to avoid costly lawsuits and settlements when they are revealed to be performing the work of entry-level employees.
In Moore v. NBCUniversal Inc., the named plaintiff sued on behalf of a class of unpaid interns working on Saturday Night Live and for MSNBC. The complaint alleged that her work on Saturday Night Live – running errands and other alleged “menial” tasks – was unproductive work that provided benefit to NBC without any corresponding benefit to the intern. A class settlement has purportedly been reached, in the amount of $6.4 million. This is just the latest in a series of media and retail companies who have been targeted by unpaid interns’ attorneys. A swell of such lawsuits began in 2011, and federal courts have seen numerous filings since this summer – including complaints by unpaid interns against Coach, Inc., the Late Show with David Letterman, the Wendy Williams Show, and Marc Jacobs International LLC.
In a recent discussion, the Solicitor of Labor noted this hot-button issue, and emphasized that this will be one of the Department of Labor’s (“DOL”) key enforcement agendas, as evidenced by their filing of an amicus brief in an appeal of a similar suit against Hearst Corporation. The DOL finds that an unpaid internship is only lawful if it is part of an educational training program. Productive work should not be completed by unpaid interns, and the employer is not supposed to derive any direct financial benefit from its unpaid interns. If an employer would have hired additional employees or required paid staff to work additional hours had interns not performed the work, the DOL will consider those interns to be viewed as employees and entitled to compensation under the Fair Labor Standards Act.
Employers should be wary of blurring the lines between interns and employees, and if in doubt, provide some compensation to their interns.