Paid Internships Benefits Interns and Employers

April 24, 2014 By

Link to USNews Article By Lloyd Ambinder and LaDonna M. Lusher

Even before the onset of the 2008 recession, college students and recent grads eagerly, if not desperately, sought out unpaid internships hoping to gain the necessary experience to land a paid job. Unfortunately, rather than provide a structured educational environment for interns, many, if not most, employers treat interns like entry level employees without providing them any compensation. In the end, rather than acquiring critical experience helpful to starting their career, most often these unpaid interns end up doing menial work like cleaning the office refrigerator and running personal errands for their supervisors. All the while their colleges and universities continue to charge thousands of dollars in tuition for academic credit, while providing little or no oversight of the interns’ activities.

While it is not per se illegal for employers to provide unpaid internship programs, perhaps it is time to make such programs unlawful. Many unpaid internship programs do not come close to satisfying the U.S. Department of Labor’s six-factor compliance test that would render them legitimate. Complying with the test is likely to prove burdensome and inefficient for most employers, particularly since a basic tenet prohibits interns from performing work that would benefit the employer or would serve to displace another compensated employee.

A common sense balance would be to compensate interns in a work environment that provides on-the-job training, thereby benefitting the employer and the intern. Employers would be free to utilize interns as they see fit, and take advantage of their talents by having them perform substantive work instead of menial tasks. Employers could further assess the interns work performance and potential for full-time employment without being subject to oversight by the DOL.

Companies such as Viacom, Sony, Madison Square Garden, Donna Karan and Warner Music Group, all of whom are currently facing lawsuits brought by unpaid interns, could have avoided the expense of litigation and eliminated exposure to liability by simply paying their interns at least minimum wage (currently $7.25 per hour under federal law). Those employers, some of whom allegedly required their unpaid interns to perform such tasks as getting coffee, making copies and picking up supervisors’ prescriptions, could have compensated their interns and directly benefited from the work and skill set the interns offered.

The interns would also benefit from mandatory paid internships because they would receive an actual wage for any variety of tasks they are required to perform. Studies show that, while nearly half of all graduating college students have performed some kind of internship, those fortunate enough to land a paid internship are more likely to gain a full-time job offer or higher starting salary than those who complete an unpaid internship. And those who perform an unpaid internship do not fare any better in finding paid employment than individuals who do not participate in any internship program at all. Offering at least minimum wage to these highly motivated and educated individuals would provide further incentive for them to work even harder to gain full-time employment.

The economy also benefits from paid internships, which generate millions of dollars in taxes and revenue to state and federal governments by requiring employers to pay minimum wages, overtime, payroll taxes, unemployment insurance and workers’ compensation. Paid internships also increase the number of paid entry-level employment positions, resulting in a decrease in the unemployment rate. Interns who are compensated also face a lesser financial burden than those who are forced to accept an unpaid internship and simultaneously work a paid position, or borrow money, simply to make ends meet. Mandatory paid internships would also generate competition amongst businesses competing for talented new recruits, and result in higher salaries for entry-level employees.

Finally, requiring employers to pay interns a minimum wage promotes the underlying remedial purposes of the Fair Labor Standards Act, which was enacted by Congress to protect workers from detrimental labor conditions and ensure payment for work performed. Conversely, encouraging employers to offer unpaid internships results in paid employees being replaced by unpaid interns, a reduction in the number of paid employment positions, and the elimination of fundamental workplace rights.

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Colleges, Employers Rethink Internship Policies

April 23, 2014 By

Court Cases, Legislation Spur Some Companies to Drops Programs; Others Introduce Pay

After a string of high-profile lawsuits, schools have tightened policies for posting summer interns. Conde Nast and other firms have eliminated their internship programs entirely, making for even tougher competition for the positions that remain. Rachel Feintzeig reports on the News Hub.

The rules have changed for summer interns.

Since last year’s class vacated the lowest rungs of the corporate totem pole, a string of high-profile lawsuits by unpaid interns has worked its way through the courts, and legislatures have passed new protections, forcing both schools and employers to rethink their policies.

Some companies are moving toward paid programs. Others, like magazine publisher Condé Nast, are getting rid of internship programs altogether. The pressures could result in better pay and educational experiences for interns who win the coveted openings—but fiercer competition for the spots that remain.

In recent years, internships have become a near-necessity for college students trying to stand out in a brutal job market. And while some positions can provide valuable work experience and a glimpse into corporate life, critics maintain that the stints often amount to little more than unpaid labor.

A survey last year from the National Association of Colleges and Employers suggests unpaid internships don’t help students land full-time jobs. Alums of unpaid internships had full-time job offers at nearly the same rate as those who had no internships at all—about 37%, compared with 62% for those with paid internships.

School officials say they are increasingly looking to protect students from subpar internships. In February, Columbia University stopped giving students special credit on their transcripts for internships. New York University now requires employers to click a button certifying their internship measures up to Department of Labor guidelines before posting it on the school’s careers website.

And Hamilton College, in Clinton, N.Y., won’t post openings for unpaid positions from companies that they know also offer paid internships.

“It’s clear, in the last year, that colleges and universities have begun to individually and collectively come up with a voice on this,” says Mary McLean Evans, assistant vice president and executive director at Hamilton’s career center.

NYU was galvanized, in part, by a petition started last year by third-year student Christina Isnardi. The 20-year old felt “exploited” after spending the summer of 2012 as an unpaid intern on a film produced by Lions Gate Entertainment Corp. She said she sometimes worked 16- or 17-hour days, taking breakfast orders for the cast and crew or watching equipment far from the film set.

A spokesman for Lions Gate declined to comment.

“There are hundreds of students who are sick of this,” Ms. Isnardi said. “We just feel as though our dreams are holding us hostage to this unfair, unethical labor practice.” Her petition gathered more than 1,000 signatures.

State and local governments also have taken up the cause, pushing in recent months for fresh intern protections.

New York Mayor Bill de Blasio signed legislation last week extending the city’s employment discrimination laws to interns, including those who are unpaid. A similar bill won unanimous support in the California State Assembly’s judiciary committee Tuesday. And Oregon last year passed a law extending discrimination benefits to all interns, while Washington, D.C., did so in 2009.

The developments are having mixed effects on employers.

Viacom Inc., facing a lawsuit brought by former MTV interns, made its hundreds of internship positions paid starting last summer, said spokesman Jeremy Zweig. Before, practices had varied, he said.

LeanIn.Org, the nonprofit group founded by Facebook Inc. FB -2.35% Chief Operating Officer Sheryl Sandberg to further women’s career ambitions, came under fire in August after advertising for an unpaid intern; the incident prompted the organization to start a paid program, according to a spokeswoman.

A suit against Condé Nast, which involves former interns at W Magazine and the New Yorker, is currently in settlement talks, according to the plaintiffs’ lawyer. Condé Nast declined to comment on the suit or whether it had any plans to revive its internship program.

Jay Zweig, a Phoenix-based managing partner at Bryan Cave LLP, said he is aware of “dozens” of companies that have walked away from unpaid-internship programs, dropping students entirely rather than creating paid positions. (Arizona’s minimum wage is $7.90 an hour.)

Though there are fewer positions, Mr. Zweig says he thinks the internships that do exist are more substantive. “They’re not just being hired on as unpaid labor doing menial tasks,” he said.

At for-profit companies, 38.2% of interns didn’t get hourly wages, according to a 2012 survey of more than 11,000 students by research group Intern Bridge.

The Fair Labor Standards Act says that unpaid internships shouldn’t be for the direct advantage of the employer, should benefit the intern and be educational, and must not displace regular employees.

One spark for the firestorm over internships was a June ruling by a federal judge that 21st Century Fox Inc.’s Fox Searchlight Pictures violated minimum wage and overtime laws for not paying interns who worked on the film “Black Swan” doing the same tasks as paid employees. Until last year, 21st Century Fox shared a parent company with The Wall Street Journal.

In November, Fox was granted the opportunity to appeal the suit’s class certification and summary judgment, which went in the interns’ favor, to the Second Circuit Court of Appeals, where it is now pending.

A Fox representative declined to comment on the suit, citing the continuing litigation.

That lawsuit has opened the floodgates. Lloyd Ambinder, partner at New York-based Virginia & Ambinder LLP, which is representing unpaid interns in suits against Warner Music Group Corp., Viacom, Madison Square Garden Co. and other employers, says he has spoken to or met with at least 40 to 50 interns in the past month.

His office will have some help handling the caseload: Ms. Isnardi, the NYU student, landed a summer job there. It is a paid position.

Article on The Wall Street Journal By Rachel Feintzeig and Melissa Korn

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Federal Judge in Manhattan Conditionally Certifies Class of Unpaid Interns at Viacom and MTV

April 7, 2014 By

New York NY – A New York federal judge granted conditional collective certification status Friday to former interns at Viacom and MTV who claim to have been denied proper wages as required by state and federal law.

In a decision published Friday, U.S. District Judge Jesse M. Furman approved procedures to allow the participation of all current and former Viacom and MTV interns who worked for the media giants since April 4, 2011. Judge Furman granted plaintiff Casey O’Jeda’s request to allow potentially thousands of other interns to receive notice of and participate in the case based on allegations that Viacom and MTV violated federal and state labor laws for not paying their interns.

“We are glad that Judge Furman saw that the unpaid internship policies that existed for Casey [O’Jeda] existed throughout the company and throughout the country. This isn’t an isolated situation. We believe there was a uniform policy and practice that existed in this enormous company where workers were not paid any wages and were taken advantage of,” said Lloyd Ambinder, of Virginia & Ambinder, LLP, who along with Leeds Brown Law, P.C., represents O’Jeda and other interns in the matter.

O’Jeda, an unpaid intern during the Fall and Winter of 2011, originally filed the case in August 2013 in a wave of collective and class action cases that were brought pursuant to the Fair Labor Standards Act and New York Labor Law alleging that unpaid internships violated numerous state and federal laws. According to court filings, O’Jeda was paid no wages for nearly five months worth of work he performed in Viacom’s Mobile Development Department and attended orientation with hundreds of other interns who were similarly unpaid. The lawsuit and court filings allege that O’Jeda performed work nearly identical to that of other paid employees and received little to no educational benefit from the experience.

“There are lots of other interns that will step forward because of a decision like this,” said Jeffrey K. Brown of Leeds Brown Law, P.C. “The judge found that there were other interns who were similarly situated and might have their rights affected by this case as it moves forward. We hope that this encourages workers to stand up for their rights to receive a wage for the work that they perform and the benefits they provide to companies.”

Pursuant to federal law, Judge Furman’s decision allows the circulation of notice to other workers granting them the right to join the case as it moves forward. This is the third high profile internship case to reach this stage of litigation. The other two cases are presently on appeal to the Second Circuit Court of Appeals regarding the requirements for an unpaid internship to be deemed legal or illegal.

“We hope this decision allows other workers whether at MTV or Viacom to step forward and seek a remedy to this alleged wrong,” according to Ambinder. “Unpaid internships disadvantage hard working individuals who are trying to get ahead and gain experience.”

“This is a big victory for our clients obviously, but it is also a big victory for workers’ rights, especially for unpaid interns,” according to Brown. “Allowing this case to proceed as a collective action gives strength to these workers to stand up together and say that they were disadvantaged.”

The case pending in the Southern District of New York is captioned O’Jeda v. Viacom, Inc., MTV Networks Music, MTV Networks Enterprises, etc., 13-CV-5658(JMF).

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