Can Companies Still Afford Not to Pay Their Interns?

June 20, 2013

Interns are feeling the momentum of last week's favorable court decision in which unpaid interns were successful in bringing their putative class action under the Fair Labor Standards Act ("FLSA") and New York and California state labor laws against defendants Fox Searchlight Pictures Inc. and Fox Entertainment Group, Inc. On Monday, June 17, Justin Henry, a former Atlantic Records intern, filed a complaint on behalf of himself and other interns at the Warner Music Group. He seeks to recover claimed unpaid minimum wages and overtime wages under New York labor law.

The complaint states that Henry worked for WMG subsidiary Atlantic Recording Corp. between October 2007 and May 2008 for five days each week from 10 a.m. to 5 or 6 p.m. Henry's duties consisted of answering the phones, faxing papers, filing papers, and retrieving lunch for paid employees. He alleges that he was not paid for any of this work.

This suit joins at least four others currently winding their way through courts across the United States, challenging the cultural notion that it is acceptable for for-profit companies to use unpaid workers. The law is clear. 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; however, employers in competitive, creative fields often have ignored them.

The cases "serve as a reminder of what the law says, and of what the basic ethic in our society needs to be. There are very few situations in which a for-profit company need not pay someone who works for it," says Ross Perlin, author of "Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy."

Unpaid internships, in our experience, are illegal if they are not primarily for the interns' benefit and predominantly educational and cultural rather than administrative in nature. If this sounds familiar, give us a call.