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Is The Unpaid Internship Dead?

Jun 14, 2013 / Media Coverage

forbes.com—Susan Adams

Headlines this week about a federal judge’s ruling in an unpaid internship case are shining a light on the murky, confusing world of internships and making it clear that in most cases the law requires private employers to pay a minimum wage, even if the interns have voluntarily signed on to work for little or no money.

On Tuesday a federal judge in New York ruled that Fox Searchlight Pictures broke federal labor law and New York state minimum wage laws when it employed two production interns, Eric Glatt and Alexander Footman, on the film Black Swan, for no pay.

Like many unpaid interns in creative fields, Glatt and Footman performed thankless tasks with no educational value, like ordering lunch, answering phones and taking out the garbage. Because so many people want to get a foot in the door in the film world, for years interns have been willing to do scut work in exchange for proximity to movie producers and talent. But it turns out that arrangement breaks laws that date back to 1938, when Congress passed the Fair Labor Standards Act, which includes many of the basic labor laws we take for granted today, like the minimum wage.

A Supreme Court case from the 1940s prompted the Labor Department to lay out a six-part test employers must meet in order to have unpaid workers. (The DOL used to call them “trainees” but changed the language to “interns” in April 2010). Among the requirements: The internship has to be similar to training in a school, it has to be “for the benefit of the intern,” the intern doesn’t displace paid workers and the employer “derives no immediate advantage” from the intern’s activities. In other words, the internship’s goal is to train and teach the intern, rather than to provide free labor for the employer. If the employer doesn’t meet those six criteria, it is supposed to pay the intern minimum wage or better.

Though the laws are clear, employers in competitive, creative fields have ignored them. As the ranks of the unemployed have swelled and the surplus of jobless college students and grads has grown, increasing numbers of people young and old have been signing on for unpaid internships, wanting to make contacts and accumulate résumé lines that can help them get paying work. No one tracks the total number of interns in the U.S. but Robert Shindell, a vice president at Intern Bridge, a consulting firm, says that more than a million American students a year do internships. Roughly a fifth of those positions pay zero and offer no course credit.

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Since then the scene has shifted. Plaintiffs have filed at least six intern suits in the last two years claiming they were cheated out of wages, including a class action filed yesterday against Condé Nast by two former interns, one at W Magazine and the other at The New Yorker. Outten & Golden, the same plaintiff-side law firm that filed the Fox Searchlight case, is bringing the suit. It claims that the W intern, Lauren Ballinger, packed and unpacked accessories, ran errands and filled out insurance forms and was paid just $12 a day. The New Yorker intern worked three days a week reviewing submissions, responding to readers’ emails, proofreading, line editing and working on the online cartoon database. He got paid $300 to $500 for each summer he worked there. In other words, both got paid far less than minimum wage for jobs the magazines would have had to pay someone else a full salary to do. The plaintiffs are seeking class action status.

Outten & Golden also sued Hearst Magazines on behalf of a former Harper’s Bazaar intern, saying she worked up to 55 hours a week for no pay. Last July a federal court ruled she could move ahead with a collective action, meaning other Hearst plaintiffs can opt into the suit. An unpaid intern also reportedly sued Elite Model Management for $50 million.

After unpaid interns sued TV news personality Charlie Rose and his production company, the defendants settled last December for an amount that came to $110 a week in back pay for a maximum of 10 weeks, to be paid to each of 189 interns.

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As I was reporting this story, I felt torn about whether interns should be able to choose to work for little or no pay—call it volunteering rather than interning–to beef up their résumés and make contacts, even if the experience includes drudgery. Certainly the New Yorker intern was learning marketable skills that would have been impossible to get in a classroom. And what about that old concept of paying dues? Justin Swartz, the Outten & Golden partner on the Fox Searchlight and Condé Nast cases, set me straight: “The law says that when you work, you have to get paid,” he says simply. In other words, you should get paid to pay your dues.

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