Unpaid Interns Are Becoming Costly

Although unemployed individuals were begging for unpaid internships just a few years ago, many unpaid interns are now bringing high-profile class actions seeking back pay and other damages for their services. Those claims have initially been successful. 

For example, a federal district court judge in New York recently applied a six-factor test announced in 2010 by the U.S. Department of Labor to find that two unpaid interns working on the set of a movie, were entitled to wages under the FLSA and its New York equivalent. Specifically, the judge found that the interns, although unpaid, worked as “paid employees work”: providing an immediate advantage to their employers while receiving nothing approximating the education available in an academic setting or vocational school. 

Of perhaps larger concern, the judge also determined that an unpaid intern at Fox Entertainment Group's corporate office could represent a potentially large class of current and unpaid interns as the litigation progressed. The decision was one of the first to certify a larger class of current and former unpaid interns for wage and hour violations. The judge warned that “[u]sing unpaid interns to fill the interstices created by eliminating paid positions [was] a clear violation” of federal and state labor laws. 

Other proposed unpaid-intern, class action cases are currently making their way through the court system. It is incumbent on employers who have or intend to create an intern program that such a program meets each of the six criteria identified by the DOL. Importantly, the DOL only considers an internship to be proper if all of the requirements are met. 

If you currently utilize such a program, or are considering implementing one, please contact your Elarbee Thompson attorney for advice on ways to ensure FLSA compliance.