Protect the Rights of Unpaid Interns

Interview with partner Jeffrey K. Brown and associate Michael Tompkins of Leeds Brown Law, PC
Aug 23, 2013
In June, a federal judge in New York ruled in favor of unpaid interns who worked at Fox Searchlight Pictures. The ruling did not make any determination that Fox Searchlight violated the law; however, it opened the door for unpaid interns to collectively seek a remedy for violations of federal and state wage laws – not just for themselves but for similar interns. In the lawsuit, the interns allege that Fox Searchlight violated state and federal minimum wage laws by not paying the production interns on the set of the picture “Black Swan” and “500 Days of Summer.” In the wake of the ruling, several lawsuits have been brought on behalf of unpaid interns in a variety of industries, including publishing, media, and music. Some of the most notable names being sued include: Sony, Viacom, Columbia Records, Atlantic Records, NBCUniversal, MTV, and Conde Nast.
Attorney Jeffrey K. Brown, of Leeds Brown Law P.C., has built a team of attorneys and staff at his firm along with Virginia and Ambinder, LLP, also in New York, to aggressively move to protect the rights of unpaid interns. The team has collaborated in the past to work on large, nationwide class actions alleging unpaid wages and views this as another opportunity to champion change, according to Jeff Brown. Brown, along with one of his associates Michael Tompkins, spoke recently about the intern lawsuits and why this has raised such public attention recently.

Q: Jeff, can you give us an overview of the issues involved in these lawsuits?

Jeff Brown:These lawsuits start from the basis foundation: if you are providing work and services to a company, then you are owed a wage. There is only one exception to that rule. If you are getting a unique educational experience – like through a one-on-one mentorship — then you may not be owed a wage. But for too long, companies have taken in hardworking college students and recent graduates, put them in a work space, called them interns, and not paid them anything. Cold calls, errands, copy work, spreadsheets, coffee and dry cleaning are not educational experiences. Meanwhile, those companies generate some of the largest profit margins our country sees outside of the financial industry. And they’ve used unpaid interns without consequence for years – saving between $600 million and $2 billion per year by some estimates. Our firm, along with Virginia & Ambinder, takes the position that a majority, if not most, interns are owed at least minimum wage. Even those that received college credits may not be exempt from federal and state law.
These lawsuits are being filed on behalf of anyone who has worked in a position identified as an “unpaid internship.” Internships have long been a tradition in a wide range of industries, designed to provide an opportunity to “learn at the feet” of experienced professionals. Unfortunately, what many unpaid internships evolved into are opportunities to obtain free labor for the companies that offer them, a way to reduce their bottom line.
Michael Tompkins: Jeff is absolutely right that there are two fundamental issues for these types of cases: (1) was your intern experience truly educational or was it designed to benefit the employer, and (2) were there other individuals who were treated like you. In general, we all know the answers to these questions, but it’s a matter of presenting them to the court and having the courage to step forward. Our hope is that the more these issues are discussed and the more conversations we have on this, the more people are willing to step forward and admit that they were taken advantage of. We also hope that it can be done in such a way that the industries change and workers can earn a wage while they enter the workforce.

Q: Does the recent court ruling in the Fox Searchlight Pictures case grant legal rights to anyone who worked as an unpaid intern?

Jeff Brown: New legal rights? No. But providing a standard for these cases going forward? Yes. The ruling in federal district court in New York does not outlaw unpaid internships per se, but the court examines the key factors that determine whether interns should be paid or not. Companies can still hire unpaid internships, but they must strictly comply with guidelines established by the U.S. Department of Labor in 2010 and those outlined by the court. The courts are still in the process of sorting out the test for unpaid interns, but this major decision provides guidance on a number of factors and how they balance against each other.
Michael Tompkins: I’d just add that, the recent court ruling in Fox Searchlight case also does another thing. It empowers those that were considering bringing these types of actions and it empowers a movement. No denying that this is a favorable decision for friends of the workers. Our clients were excited when they heard about it, and this issue has been floating out there for a number of years – on Colbert, on the bookshelf, or in the movies – but it’s just considered the status quo. You do it because you have to. And now we are seeing people, especially hardworking interns, step forward and say they are fed up with having to go through this process without any benefit to them.

Q: What are the requirements for an unpaid internship to be legal?

Jeff Brown: Courts and the Department of Labor consider six primary criteria under the totality of the circumstances to determine if an internship requires minimum wage or not. These criteria are:

  1. The internship must be comparable or similar to training that would be available in an educational or vocational environment
  2. The internship must be for the benefit of the intern, not the employer
  3. The intern may not displace or replace paid employees, but must work under close supervision from the existing staff
  4. The employer may not derive any immediate advantage from any work done by the intern
  5. The intern may not necessarily be entitled to a paid position at the end of the internship
  6. All parties must understand up front that the intern is not entitled to compensation for any time spent with the company

It’s worth noting that most employers seemingly cannot satisfy points number 1, 2 and 4. Most internship scenarios involve one-way streets. The benefit almost always goes to the employer, who gets free labor and additional support staff without ever having to hire any entry-level workers. Unpaid interns get the same experience and knowledge that any other paid worker gets.

Q: What types of tasks would violate unpaid internship law?

Jeff Brown:The important thing is the totality of the circumstances. Standing by the copier, sorting mail, answering phones, and running errands are usually the tasks we think of for an unpaid internship. Performing those tasks every now and then may not violate the law, so long as the vast majority of your internship was educational and learning based. However, If most of your internship was based on performing basic office tasks like answering phones, making coffee, taking lunch orders, driving other employees to and from appointments, making copies or filing documents, assembling office furniture, and even picking up dry cleaning or other items, then you are probably owed minimum wage. If you shadowed a president of the company, sat in on important meetings, and discussed his/her decisions, then your experience sounds more like a legitimate internship. Very simply, the tasks an intern performs should contribute to an understanding of the industry or help build substantive skills for their career. If they are being performed for the benefit of the company – not the intern — then the intern must be compensated.
Michael Tompkins: Tasks are only one part of the inquiry. The court’s decision and the DOL regulations also point to supervision of the worker and his/her bosses. If you are being stacked with a group of interns in a cubicle in the basement with little or no guidance, no matter what tasks you perform, it is more likely that you should have gotten paid for your internship. But if you are getting mentoring and one-on-one instruction, then the tasks you perform are likely to seem more significant and more educational. The key is to focus on the totality, not just the elements in isolation.

Q: What if an intern receives college credit for the internship? Is it still a violation of the law if they are not properly paid?

Jeff Brown: Yes. Whether you earn college credit or not is one element that might play into the factors that the DOL and the court have laid out. For example, the judge in the recent case involving Fox Searchlight Pictures (the “Black Swan” case) held that whether or not the intern received college credit was not relevant. What mattered was whether the company complied with the law.

Q: If someone believes they were exploited during an unpaid internship, what should they do?

Jeff Brown: Contact a lawyer who knows the issues and can assess your situation. Any good attorney will provide you with a free confidential consultation in person or over the phone. Let him or her assess your claim and provide you with enough information so you can make an informed decision on how you want to proceed. Additionally, if you worked with other interns, you likely can participate in a class or collective case, where you can seek to have the court rule on behalf of all the interns for one company. Some of these cases could involve several hundred or several thousand interns. There is strength in numbers in these cases.
Michael Tompkins: One of Jeff’s main points that he conveys to our team: always be available to the clients. We are always there to talk about workers’ rights or facts that the law considers important. We do it confidentially. Whether you want to file a lawsuit, join a lawsuit, or just know what the law says, we are here.

Q: Are there specific industries, or defendants, that you are targeting?

Michael Tompkins: There is no doubt in my mind that specific industries have exploited interns in greater number than others. Music, film studios, financial services, television production, publishing, and media outlets stand out in my mind. Bottom line, think of all the promising fields that you, as a college student, would want to go into, then you will find some of the worst culprits.
ff Brown: I agree. Those are also the industries that have the healthiest profit margins in recent years. These aren’t small business. These are major employers that make millions in profits each year. These are the ones that could afford to pay all of their workers – even the bare minimum wage. Instead, the status quo has been for successful businesses to take advantage of young, inexperienced workers with the promise of experience and job possibilities. However, after a few months of standing over the copier and fetching the mail, the internship ends and there’s no job waiting. A new crop of interns come in and the company never has to hire any entry-level workers. It’s an unfortunate experience for those trying to enter the labor force. Now, it’s starting to gain momentum as an unacceptable business practice.

Q: Is there specific advice you have for anyone currently working as an unpaid intern?

Jeff Brown: Keep track of your hours and what you do. If you are working as an unpaid intern for a business, you should document everything you do on a daily basis. Keep a record of how you spend your time, names of anyone you worked with, the amount of time you spent on tasks, and the duties you performed. Keep any items that can serve as proof. For example, if you are asked to go pick up lunch, laundry or other items, keep the parking receipt.

Q: It seems that unpaid internships have been a “rite of passage” for college students and recent college graduates for decades. What is different now? Why are unpaid interns standing up now?

Jeff Brown: The economy has contributed to the current climate, and it has influenced both sides. Companies look for ways to improve profitability, and free labor can be an easy answer to vice presidents and budget specialists. Replace a full-time worker with three interns and you’ve saved your company a salary. On the worker’s side, most unpaid interns simply believe that they had no right to compensation, that this is just the way to break into the field. In addition, many interns believe that standing up to the companies that have abused them would be a form of “career suicide,” that they would become pariahs in their chosen industry unless they played by the rules. Because of the challenges in the economy over the last five years, with fewer and fewer jobs available, many interns have taken an attitude that they have little or nothing to lose for going up against big business.
I also believe that the availability of information in our culture has contributed to both the willingness of unpaid interns to seek compensation, as well as the inclination of some companies to make amends. Many big companies don’t want to have a reputation for taking advantage of young people, such as college students or recent college graduates. Because negative information can go viral pretty quickly, some companies have stepped forward to reimburse past unpaid interns, and have changed their programs moving forward. The bottom line, though, is that it has taken a significant amount of courage on the part of those who initially challenged this longstanding and, in our opinion, improper practice.
Michael Tompkins: Unpaid internships turned into an epidemic during the recession. Employers slapped the “intern” label onto anything they could find — including former paying jobs – under the misbegotten belief that they didn’t have to pay workers if they called it an intern or an internship. Unfortunately, that’s not the law. While employers were worried about their bottom lines, workers started to notice that they were being disadvantaged. A few years or months ago, being an unpaid intern was a punch line or joke as to how big business took advantage of tomorrow’s leaders. Now, a confluence of events has created a window for affecting change in the business culture – for the benefit of hard-working individuals.

Q: Are there any limits on who can seek compensation for work done during an unpaid internship?

Jeff Brown: Yes. First, there are statutes of limitation that require that you file suit within a certain period of time. Each state has its own time period. In New York, it’s six years. If your claim is filed in federal court, the time limit for filing is typically three years. Additionally, there may be certain employers that are exempt from the rules. The law in the field is still developing but generally non-profits, like food banks and government entities, may be entitled to greater leniency. The Department of Labor, for example, has not issued any explicit rulings regarding unpaid internships with charitable organizations or non-profits. Nor has the Wage and Hour Division gone after those organizations for these types of wage violations.

Q: What if you were hired as a “trainee” or as a “provisional” or “probationary” employee, and paid for your services?

Jeff Brown: Your title at the company is basically irrelevant. Are you performing work for their benefit? A company cannot simply avoid the law on unpaid internships by calling a person a “trainee” or anything else. Furthermore, the rule doesn’t just apply to unpaid internships, it applies to “underpaid” internships as well. The law is designed to enforce minimum wage laws. If you are required to work a specific number of hours, and your total compensation for those hours does not compute to the minimum wage per hour, you have a claim against your employer. For example, if you are working for a financial services company, making cold calls from the office 60 hours a week, and you are paid $200 per week ($3.34 per hour), you have a claim for not being paid minimum wage of $7.25 per hour.

Q: What are the unintended consequences here? Can you explain what you mean that there are other victims?

Jeff Brown: Certainly. I think most people assume that the only person who actually suffers from an unpaid internship is the person who worked for no financial or educational benefit. However, there are other repercussions. Unpaid interns displace people who would and should be paid to perform these services. Those are also victims because they never had to the opportunity to work for the company and make a living. Next, because these internships are unpaid, they are only available to those individuals who can afford to work for free. An unpaid intern has to be sound financial or have the support of other people to work for free for an extended period of time. Consequently, they reward the “haves” at the expense of the “have nots.” We want to put an end to that. We believe that these opportunities should be available to people based on their ability or their work ethic, not their ability to work for nothing.
Michael Tompkins: There is a vicious cycle whereby no entry-level jobs are ever filled, and the underprivileged cannot afford to take unpaid internships. People with means who can afford to borrow money or can stay at their parents are the ones that can afford to take unpaid internships. It is an absolute blessing to be in that situation. But it shouldn’t be the threshold for trying to gain some experience. What happens if you can’t afford to work without getting paid, take out loans to pay for rent, or stay with family that lives near the company? The answer is simple: you never get the internships and gain the experience. That’s the argument that people don’t always notice. Jeff is right that getting a job or a real internship should be based on what you can provide to the company – not whether you afford to be free labor for 3 months.

Q: You have used the term “exploitation” to describe the conduct of companies that illegally benefit from unpaid internships. Is that too strong?

Jeff Brown: No. Consider this..Fox Searchlight Pictures grossed more than $300 million on the movie Black Swan, but couldn’t pay its interns minimum wage? As I indicated earlier, many of the companies that have been most egregious in this practice-Conde Nast, the Hearst Corporation, the Charlie Rose production company – are companies that are not experiencing financial problems.
At one level, it’s about paying a fair wage for a fair day’s work. But at another level — and more fundamental level — it’s about respect. Anyone who works wants to be respected for what they do. And pay is what Ross Perlin calls “the fundamental currency of respect in the modern economy.” Unless a person willingly volunteers, or unless they are provided with a legitimate training or educational opportunity, he/she should be paid for any work he/she does. Interns know that they are starting out at the bottom, but they are willing to give their time if they get something in return. When they earn nothing and learn nothing as well, there is no other way to describe how they have been treated other than exploitation.
Michael Tompkins: It is exploitation, and it is corrosive to the economy that a generation of workers and future leaders had to go through a cycle of being an intern, collecting a few internships, to reach a level of experience that they could earn a wage. It’s more debt and hardship that young people had to burden themselves with before they are “ready” to enter the work force. That’s a blatant attempt, in my mind, by big business to avoid paying a few dollars each hour – being more concerned with the bottom line than the impact on the people. When you create that type of corporate environment, you are admitting that you are willing to reach the lowest common denominator and ignore the role you are supposed to be playing in sustained growth.