As employers increasingly weigh value in real-world experience, internships have proven to be a major way for students to leverage job opportunities in their respective fields. Many universities have moved internship programs to the core of their academic offerings, highlighting the importance of connecting studies to work. Nonetheless, there are still many challenges companies face with internship programs today. At the core of those challenges is the legality of unpaid internships and how internship-heavy industries must create an educational environment for student workers.
In 2011, a lawsuit against Fox Searchlight Pictures, filed by two former unpaid interns who worked on set of Black Swan, directly challenged the internship system. The class-action lawsuit claimed the interns should have received at least minimum wage compensation for their work. Similar to many other unpaid interns today, their work largely consisted of menial tasks such as fetching coffee or retrieving lunch orders. The lawsuit against Fox has opened the floodgates to a number of other recent legal actions, filed by unpaid interns against their previous employer on account of wage violations.1 Since Fox Searchlight Pictures was filed, former unpaid interns have filed suit against Warner Music Group, Bad Boy Entertainment, MTV, and Lionsgate alleging that they legally qualified as employees rather than trainee.2
In each case, the former unpaid interns are attempting to show that their duties did not meet the required criteria qualifying them as unpaid interns. The United States Department of Labor’s six-prong test outlines factors to consider when making a determination as to whether an internship at a “for-profit” company may be unpaid. The six factors include: (i) The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment; (ii) The internship experience is for the benefit of the intern; (iii) The intern does not displace regular employees, but works under close supervision of existing staff; (iv) The employer that provides the training derives no immediate advantage from the activities of the interns; and on occasion its operations may actually be impeded; (v) The intern is not necessarily entitled to a job at the conclusion of the internship; and (vi) The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.3 If each of the six factors is met, there is no employment relationship pursuant to the Fair Labor Standards Act and the Act’s minimum wage and overtime provisions do not apply to the intern.
While the basic facts and themes of the unpaid intern cases are relatively similar, the specific details about the case against Warner Music offers an example highlighting some of the prevailing and troubling issues with these positions.
In 2012, Kyle Grant moved out of his girlfriend’s mother’s house and into a homeless shelter because he did not have sufficient funds to live on his own. Despite his situation, Grant took an unpaid internship position in Warner’s Music Promotions Department, as he had high dreams of launching his own label one day. Instead of hands-on learning experience with WMG, Grant spent well over forty hours per week making coffee, doing dry cleaning, and repairing employee’s personal items. The internship often required Grant to be at work until 8:00 or 9:00 PM. However, the shelter where Grant was staying had a curfew of 8:00 PM, and, many times, Grant was forced to face losing his job or losing his spot at the shelter. During Grant’s tenure at Warner, he was concurrently taking classes, but his work schedule caused his grades to suffer. Other instances cited by Grant show that, at least in one instance, he was forced to choose between attending a mandatory meeting to continue receiving food stamps or losing his internship. Grant also mentioned that during his eight months at Warner, he encountered a number of interns who had been there for three or four years.
The facts in the case against Warner illustrate the imbalance of power in the intern-employer relation. What makes these particular suits unique is that they tend to involve an oversupply of labor. Those who do receive unpaid internships, especially with industry leaders, are constantly aware that if they do not do everything expected of them, and to the best of their abilities, others will. A former intern who joined in one of the class action suits explained a common practice of deceptive advertising, where companies “sell the internship experience as getting a foothold into employment… and it’s kind of a smokescreen.”4
The large number of people vying for spots in the entertainment field may also explain why the industry has for so long been able to reclassify unpaid interns as apprentices and trainees. However, a quick look at what the unpaid interns from most of the suits actually did while on-the-job shows that the majority of their tasks were menial in nature and for the benefit of the employer, not the intern. Moreover, almost none of the menial tasks would cause the intern to be classified as an apprentice or trainee since they were not preparing the intern for any particular job or task.
Another obvious issue that Grant’s experience with Warner demonstrates is that, for the average person there is a relatively large opportunity cost associated with taking these positions. Many who work unpaid internships are forced to compromise living situations, schooling, and personal expenses. This is not the case for interns that happen to have means. Inevitably, this skews the applicant pool towards the better off.
In deciding for the plaintiffs in Fox Searchlight, Judge Pauley of the Southern District of New York held that the “production interns were entitled to minimum wage because they did the same work as regular employees, provided value to the company, and performed tasks that didn’t require specialized training.” While this holding meant a victory for those particular interns, it has made breaking into the industry even more difficult. Some companies, like Condé Nast have discontinued all intern programs, while others, like the New York Times, are now paying all interns minimum wage.
The recent influx of intern cases has deterred many leading companies from using unpaid interns for fear of litigation. Some companies that can afford to pay what were initially unpaid internship positions now do so, but because many companies completely stopped their internship programs, students and those looking to break into the industry are facing new obstacles.
The importance of an internship in gaining valuable experience and connections in the industry is not in doubt. Underemployment amongst recent graduates was reported at 40% in the aftermath of the recession5, so a healthy internship system is crucial for both the employer gaining new staff, as well as those looking for job opportunities.
In fairness, the problem is a complicated one. Colleges are taking on more students and marketing their industry connections as a source of employment. Experiential learning, including out of campus offerings in business settings, are also a growing segment of the curriculum. Both play into the hands of business, and business plays its hand as it can. With surplus labor around and the fear of litigation, retrenchment by business is natural. Finally, when the Courts are asked to intervene, they will likely err on the side of providing protective safeguards for labor—which makes experiential learning harder to get.
By Justin Berezin