E-Alerts
Lawsuits Challenging Status Of Unpaid Interns: On The Rise
[February 21, 2012] The prospect of hiring volunteer interns is alluring. But employers are learning the hard way that interns cannot be employed as volunteers, except in narrow circumstances. Two recent lawsuits illustrate this trend—and underscore the importance of treading carefully when considering “hiring” anyone on a volunteer basis.
Both cases involve the entertainment media industry, which relies heavily on interns, and both lawsuits seek class-action status. In Wang v. Hearst Corp., a former intern for the fashion magazine Harper’s Bazaar claims that the publisher failed to pay minimum wage and overtime to numerous interns who worked up to 55 hours per week over a four-month period. Similarly, in Glatt v. Fox Searchlight Pictures, Inc., two interns allege that the defendant unlawfully treated them—and dozens of their peers—as unpaid volunteers for work related to production of the movie “Black Swan.”
In light of these cases, which are in their initial stages, and which may portend a wave of such lawsuits if the plaintiffs are successful, employers should familiarize themselves now with the challenges of “hiring” volunteer interns.
Internships At For-Profit Employers
Under federal law, an internship at a for-profit business cannot be unpaid unless: (1) the internship is similar to training given in an educational environment; (2) the internship experience is for the benefit of the intern; (3) the intern does not displace regular employees and works under close supervision of existing staff; (4) the employer derives no immediate advantage from the activities of the intern, and, on occasion, its operations may actually be impeded; (5) the intern is not entitled to a job at the conclusion of the internship; and (6) the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
Internships At Non-Profit Employers
Federal law includes a special exception, under certain circumstances, for individuals who volunteer to perform services for a state or local government agency and for individuals who volunteer for humanitarian purposes for private non-profit banks. The U.S. Department of Labor’s Wage and Hour Division (“WHD”) also recognizes an exception “for individuals who volunteer their time, freely and without anticipation of compensation, for religious, charitable, civic, or humanitarian purposes to non-profit organizations.” The WHD has explained that “[u]npaid internships in the public sector and for non-profit charitable organizations, where the intern volunteers without expectation of compensation, are generally permissible.” While the WHD has not clearly defined the terms “religious,” “charitable,” “civic,” or “humanitarian,” the WHD has stated that it is “reviewing the need for additional guidance on internships in the public and non-profit sectors.”
State Requirements
Sometimes, states impose additional requirements. For instance, in Massachusetts, a for-profit employer may need to show that an unpaid internship is part of a formal educational program, such as by being affiliated with a local college or university. If this interpretation of Massachusetts law is upheld against an employer that fails to comply with it, then the employer will be subject to mandatory treble damages and required to pay the prevailing plaintiff’s attorneys’ fees. Thus, employers should be sure to review state, as well as federal, law in considering the legality of any proposed internship.
Recommendations For Employers
Employers interested in providing internships should: (1) require interns to sign an agreement confirming that no wages will be paid for time spent in the internship and that the intern will not be entitled to employment at the conclusion of the internship; (2) structure the internship to focus on the provision of broadly applicable training to the intern, not on the performance of routine tasks by the intern; (3) avoid even the appearance that unpaid interns are being used to displace or to avoid hiring regular employees; (4) if in the non-profit context and risk-averse, tailor any internship so that it satisfies the factors applicable for-profit employers; and (5) establish a formal academic affiliation, if required or advisable under applicable state law.
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Please feel free to contact us if you have any questions regarding establishing an unpaid internship, or need assistance with a threatened lawsuit involving these issues.
