Thousands of Emboldened, Disgruntled Former Interns Potentially Eligible to Sue Advertising Age
July 2, 2013

Media companies alarmed by the spate of lawsuits by former interns can expect more of the same soon, according to experts in labor law.

A judge’s ruling last month that Fox Searchlight violated minimum wage laws by not paying interns is likely to embolden other potential plaintiffs. They had been gathering anyway, filing new lawsuits against Conde Nast on June 14 and Gawker Media on June 21, alleging that each company had violated laws by failing to pay minimum wage.

The statute of limitations in New York for cases involving wage and labor issues is six years, legal experts said, meaning thousands of former interns could potentially bring suits or join class actions against their former employers.

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 Beyond media companies

The battle over unpaid internships isn’t limited to media companies, of course. Fields including sports, entertainment and even the law itself are all seeing growing suits from plaintiffs, who are coming armed with a 2010 fact sheet from the Department of Labor that spells out six criteria for a legal unpaid internship. It requires, among other things, that interns don’t displace regular employees, that the experience is for the benefit of the intern and that the employer gets no immediate advantage from the intern.

The media business, however, has long been a high-profile source of unpaid internships — which often seem like the only way to break into a somewhat glamorous field. Now it is a focus for litigation. One of the former interns who sued Conde Nast compared her plight to Anne Hathaway’s character in “The Devil Wears Prada.”

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Companies that failed to pay their interns at least minimum wage in the last six years, even many of the ones that offered college credit, now look vulnerable, attorneys say. Charlie Rose’s production company agreed last December to pay back wages to former interns rather than continue fighting their suit. The judge in the Fox Searchlight case said that college credit should not be a determining factor as to the legality of an unpaid internship, pointing instead to the six criteria from the Department of Labor.

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A $2-billion-a-year savings?

Opponents of unpaid internships say they’ve replaced entry-level positions at media companies. At Hearst, unpaid interns and paid assistants perform many of the same tasks, court documents allege. Neither Hearst nor its law firm Proskauer and Rose responded to requests for comment.

They also restrict entry-level opportunities to people who can afford to work for free, attorneys for the plaintiffs say. “It’s not fair that a good portion of the population can’t afford to have an unpaid internship,” said Sally Abrahamson*, associate at Outten and Golden, the firm representing plaintiffs in the Hearst, Conde Nast and Fox Searchlight Pictures cases.

Unpaid internships save companies at least $2 billion a year, said Ross Perlin, author of the book “Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy.” Their use has helped to produce a cottage industry of firms that place young people in internships for a steep fee, as well as led to a glut of unemployed or underemployed college graduates whose resumes are studded with internships.

A report out Thursday from the New York Federal Reserve showed that underemployment rates among recent college graduates is reaching 45 percent. The same report said that student loan debt nearly tripled between 2004 and 2012.

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A larger crop of unpaid interns and diminished prospects for real employment may be combining to encourage the new wave of suits. Only a few years ago, an intern suing a former employer was nearly unthinkable, tantamount to career suicide.

Steven Kotok, CEO at The Week and Mental Floss magazines, hopes the unpaid internship model ends. “When I see this kind of system that gives access to the publishing world to people with other means of support, it has me rooting that the system would end and everyone would have a fair shot, whether or not they have other financial support,” he said.

*(admitted pro hac vice; not admitted in New York, admitted in Texas and the District of Columbia only)