Yesterday Condé Nast announced it was shutting down its internship program. A spokeswoman for the company, Patti Rockenwagner, confirmed the news this morning, but declined to elaborate on the reasons behind the decision or even say how many of the company’s magazines have been relying on interns. Condé Nast owns 25 publications, including Vogue, The New Yorker and Vanity Fair. In most instances its interns earn academic credit but get little compensation.
Lauren Ballinger and Matthew Leib, former interns at W magazine and The New Yorker, filed suits in June in Federal District Court in Manhattan claiming that the magazines had run afoul of federal and state labor laws. Leib charges that The New Yorker paid him far below the minimum wage in stipends of just $300-$500 for each of the two summers he worked there. His job was to read, proofread and review articles. Ballinger said in the complaint that she was paid just $12 a day for shifts that ran 12 hours or more at the fashion magazine.
Justin Swartz, a partner at Outten & Golden, the New York law firm representing the Condé Nast interns, says the company’s decision to cancel the internship program will have no bearing on the pending suit. “Their decision seems rather childish,” he says. “If they can’t play by their own rules they take their ball and go home.” Swartz also represents former interns at movie studio Fox Searchlight Pictures who prevailed in the initial phase of a suit claiming that Fox Searchlight violated federal and New York minimum wage laws by failing to pay them. About Condé Nast, Swartz adds, “It seems to demonstrate the flimsy commitment that Condé Nast had to students and education.”
But Daniel O’Meara, chairman of the employment law division of Philadelphia-based Montgomery, McCracken, Walker & Rhoads, says that while Condé Nast’s decision to scotch its internship program won’t reduce the company’s potential damages in the suit that’s pending, it could protect them going forward “because there won’t be new people signing up.” He says he has gotten a series of calls from both for-profit and non-profit clients asking what they should do about their unpaid internship programs. “When I talk them through the risks, including the higher visibility of the unpaid internship issue, they are saying they aren’t going to use unpaid internships anymore,” he says. “No good deed goes unpunished.”
The Fox Searchlight and Condé Nast cases are just two in a rash of more than a half dozen recent suits brought by plaintiffs in creative fields like publishing, fashion and film, who point to a six-part test laid out by the Labor Department following a Supreme court case in the 1940s. ...
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Though those rules are decades old, as are unpaid internships, only now are lawyers and plaintiffs testing them in court. So far two cases have made their way to the federal appeals court for the Second Circuit, which includes New York, where the Fox case and a suit by interns at a Hearst magazine, Harper’s Bazaar, will be heard.
Plaintiff lawyers like Swartz say the test is clear. “When the company receives a direct benefit from the intern’s work, they have to pay the intern,” he says. “Taking a step back, there’s no straight-faced argument that Condé Nast or any company can make that they can’t afford to pay minimum wage.”
Swartz adds that nonprofits are not exempt. Though in some cases, like docents in a museum, it’s possible to volunteer, if the interns are doing substantive work like research that the institution would otherwise be paying someone to do, the law says the employer has to pay minimum wage. The only institution that’s exempt from the law: the government.
Outten & Golden is also representing a group of people who volunteered at a Major League Baseball fan festival who he says deserved minimum wage. “There was no element of educational experience,” he contends, “Major League Baseball made a lot of money from the festivities and it can’t accept free labor.”
But Lyle Zuckerman, a partner at Vedder Price, a New York labor lawyer who is representing Warner Music Group and Viacom VIAB +0.64% in suits brought by unpaid interns, says the law isn’t nearly as clear-cut as Swartz contends. Though Zuckerman represented the Charlie Rose show, which settled with interns who alleged violation of the labor laws, he says the amount his client paid out, $50,000, came out to jut $110 a week for the interns. “It would have cost ten times that amount to get through class certification and summary judgment,” he says. “It was a business decision and a relatively easy one to settle.” Zuckerman maintains that Rose did nothing wrong. Though the interns did research on the guests, “the research was of absolutely no value to the company because the producers were doing their own research.”
According to Zuckerman, the courts should look at “the totality of the circumstances” of the internship and it’s ridiculous to make the test dependent on whether the employer got any benefit at all from the interns’ presence. “The interns are going to come in, they’re going to turn the lights on—there is always going to be some benefit to the company.” Though the judge in the Fox Searchlight case ruled that the question should turn on a strict reading of the DOL’s six-part test, the judge in the Hearst case said the courts should take the total circumstances into account.
One argument against unpaid internships is that only privileged young people whose parents have the means to pay their way will be able to afford to take them. ...
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Like Condé Nast, the Charlie Rose show cancelled its internship program after being sued, according to Zuckerman, to protect itself from potential further litigation. Zuckerman says Condé Nast is doing the same thing: “As long as Outten & Golden is going to be filing these lawsuits and taking these extreme views, they have a fiduciary responsibility to their shareholders.”