Nadia Bermudez Interprets Recent Decisions on Unpaid Intern Cases

Unpaid Intern?  Not So Fast Says Court

By Nadia P. Bermudez

As unpaid internships have gained popularity among the unemployed, a recent ruling may impact the continuance of such internship programs in the private sector.  Earlier this week, a New York district court judge ruled that Fox Searchlight Pictures violated labor laws after using unpaid interns to perform tasks on the movie set for the Oscar-winning film, “Black Swan.”   Within days, another lawsuit was filed in the same court with similar allegations against publishing giant Condé Nast. In those cases, the former interns will seek back pay for unpaid wages, interest, and other potential penalties.  In those kinds of cases, the question is whether the interns meet a stringent test under the law to exempt them from receiving a minimum wage.  The Fair Labor Standards Act defines the term “employ” very broadly as including to “suffer or permit to work.”

In essence, covered and non-exempt individuals who are “suffered or permitted” to work must be compensated for the services they perform for an employer; i.e., they must receive a minimum wage and overtime pay if applicable.  Under Federal law, the more an internship program is structured “around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience…”   Courts also look at a variety of factors such as whether an employer uses interns as substitutes for regular workers or whether the employer makes an unpaid internship condition for a later permanent position.

In sum, internships should not be viewed as a cost-saving device for business. Therefore, Companies are advised to make sure that internships truly have an educational component, and that interns are not displacing regular workers.  There is significant exposure to liability, as such claims can easily convert into class actions because of the commonality of the issues presented.  Companies are urged to use caution in developing internship programs, and work with legal counsel to ensure that their internship program is a truly exempt from the Fair Labor Standards Act.

 

Nadia P. Bermudez is a partner with Garcia, Hernández, Sawhney & Bermudez, LLP. She specializes in employment litigation, counseling and general business litigation. For more information please visit www.ghsblaw.com.