Conde Nast Agrees to Pay $5.85 Million to Thousands of Workers Classified as Interns

On December 29, 2014, the U.S. District Court for the Southern District of New York granted conditional certification of a class of employees who had worked as unpaid interns at Conde Nast, and gave its preliminary approval for a heavily-negotiated settlement agreement, in Ballinger et al v. Advance Magazine Publishers, Inc. Plaintiffs in the lawsuit were Lauren Ballinger and Matthew Leib, along with a class of about 7,500 class members, all interns who received either no pay or a stipend for their services.

Under the agreement, each class member will receive between $700 and $1,900, the two named Plaintiffs would each receive an additional $10,000 in service payments, and Plaintiffs’ attorneys would receive a total of $660,000.

Plaintiffs argue that the two laws at issue in the lawsuit–the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL)–do not contain exceptions for interns, who therefore must be paid (1) minimum wage for all hours worked and (2) premium overtime pay for all hours worked in excess of forty per week. But many companies, Conde Nast included, hire “a steady stream of interns to perform entry-level work that contributes to its magazines’ operations and reduces its labor costs.” These interns are normally unpaid, and when they do receive pay it is normally in the form of a per-semester stipend that is equivalent to less than $1 per hour for the time they spend working.

Even as it approved the proposed settlement, the Court acknowledged that the central issue in this case–whether interns are employees–is “unsettled in this circuit.” The Court cites two S.D.N.Y. cases in which the respective courts reached inconsistent conclusions on this issue. Since both of these decisions are currently under appeal, and forthcoming rulings on these cases could have “a devastating effect on one side’s position” in the present case, “continued litigation of the issue of liability poses a substantial risk to both sides.” The Court concluded that the existence of this risk is a consideration favoring the proposed settlement of the case, making it worthwhile for the class of Plaintiffs to compromise and settle for about 60% of their unpaid wages.

In certifying the class, the Court pointed out that class action was economically sensible due to the fact that members of the class were interns, generally “younger individuals at the start of their careers,” who had limited resources and individually stood to gain only limited awards even if successful.

If you believe your rights under the Fair Labor Standards Act or corresponding State law have been violated, please contact The Harman Firm, LLP.