HR Management & Compliance

FLSA Lawsuits Show Steep Learning Curve for Employers Offering Unpaid Internships

Employers using unpaid interns need to be wary as lawsuits challenging the structure of these unpaid jobs continue to crop up.

In recent years, several high-profile lawsuits — primarily in the publishing and entertainment industries — have highlighted the exposure employers can face. Plaintiffs generally allege they were doing the work of employees and were entitled to pay under federal wage and hour law. Some recent disputes have been settled, while others are still working their way through the legal system.

Thus far it is still unclear where the courts will ultimately come down on the issue. Some courts have ruled in favor of employers and many cases are settled before a judgment can be rendered. But until case law becomes more definitive, employers need to be aware of their legal liability in using unpaid interns and externs. Failing to abide by the law can result in prolonged litigation that can be costly, regardless of how the dispute ultimately is resolved.

Last year Fox Searchlight, Hearst Corp. and the Charlie Rose Show were each sued by unpaid interns. Two of the lawsuits are still working their way through the courts, but the Charlie Rose Show settled for $250,000 last year. Outten Golden is the law firm representing the plaintiffs in all three cases.

A recent ruling on part of a case against Hearst Corp. for its use of unpaid interns on magazine staffs went in the employer’s favor. In February 2012 a former Harper’s Bazaar intern sued Hearst alleging FLSA and New York state labor-law violations claiming she worked more than 40 hours a week doing the work of a full-time employee. She alleged she should have been paid minimum wage and overtime, and sought class certification for other similarly situated interns.

The plaintiffs won conditional certification of the case last summer. More recently, the plaintiffs alleged that Hearst’s requirement that interns receive credit for their internship amounted to an unlawful wage deduction because they should be considered employees. A federal judge in the Southern District of New York dismissed that specific claim in January (Wang v. Hearst Corp., 2013 U.S. Dist. LEXIS 3768 (SDNY Jan. 9, 2013)).

In a separate lawsuit, two former interns sued Fox Searchlight for hours worked on the film Black Swan. The lawsuit alleged Fox Searchlight used interns to perform jobs that would ostensibly be done by paid employees (Glatt v. Fox Searchlight Pictures Inc., No. 11 Civ. 6784, S.D.N.Y. Sept 29, 2011). According to attorneys in the case a motion granted in October allowed the plaintiffs in the lawsuit to expand its scope to include a larger group of possible interns.