New York’s Coldest Summer, Especially for Employers Who Utilized Unpaid Interns

Employment Law Summer Recap 2014: Part 8 of 11 – New York’s Coldest Summer, Especially for Employers Who Utilized Unpaid Interns

Link to the Employment Matters Blog Article by Michael Arnold

It felt like we were in a dream. Or maybe San Diego. Day after day, 82 degrees and little humidity. In a word: pleasant. We know next summer probably won’t be the same, but we sure enjoyed this one. That’s right – this was the “coldest” summer in New York’s history. And the same can probably be said for many employers in the media, entertainment and retail industries who are battling unpaid interns in the courtroom.  Each week seemed to bring us another unpaid intern class action lawsuit: Oscar de la Renta, Coach, Donna Karen and Sirius XM to name a few. And courts continued to certify classes in existing unpaid intern lawsuits: Warner Music and Gawker for example. Many of these employers may be on the hook for millions of dollars in back wages, liquidated damages and attorneys’ fees.

This all started almost exactly three years ago when two former unpaid interns sued Fox Searchlight – an independent film division of 20th Century Fox – claiming that the company should have classified them and other interns as employees and paid them at least the minimum wage and overtime.  In June 2013 a New York Federal Court allowed the interns to seek collective relief and it was game on as lawsuit after lawsuit followed. The Fox Searchlight case and another intern case (Hearst) have since made their way up to the Second Circuit Court of Appeals, which will decide this Fall the appropriate standard a court should apply when deciding the classification issue.

Even if the Second Circuit ultimately makes it easier for unpaid interns to initiate class actions, we expect that the number of these lawsuits will eventually plateau and even drop off as many employers have already started to adjust their behavior by paying their interns or restructuring their internship programs to meet the Federal and various state department of labor internship tests.

In some cases employers have eliminated their internship programs altogether, but on the whole, we expect internships to remain prevalent in the workplace. In fact, one study says that more than half of graduating college seniors have held at least one type of internship while they are in their collegiate/formative beer pong years. Pro Publica, an investigative journalism non-profit, says that’s double the number from just a decade ago and it doesn’t even include college graduates, high schoolers or others individuals. Internships also play an important role in the lives of younger workers as they allow students and job seekers the opportunity to build their resume, grow their networks and gain valuable experience. They also serve as less expensive forms of labor for employers (even when paid). In other words, internships aren’t going anywhere.

Although summer is now behind us, that does not mean you should necessarily focus your attention away from this issue, especially if you have a winter break internship program or utilize interns year-round. We previously offered some helpful tips in structuring your program properly here.

Ex-Warner Music Group Interns Clear Hurdle in FLSA Case

Link to Law.Com Article By David Bario

How's this for a bummer? Work from 9:30 a.m. to 8 p.m., five days a week, answering phones and making coffee and copies in a Manhattan office. Oh, yeah, and there's no pay, no career training and no academic credit.

That's how Kyle Grant allegedly spent nine months in 2012 and 2013, working at Warner Music Group’s Warner Bros. Records unit. Why Grant would exhaust almost a year of his young life this way is anyone's guess, but for employers the important thing is what he chose to do next. Last summer, Grant hooked up with one of the plaintiffs firms behind a growing wave of employment class actions in New York federal court, claiming that WMG violated the Fair Labor Standards Act when it failed to pay him and about 3,000 other ex-WMG interns for their work.

The case passed an early test on Tuesday, when U.S. District Judge Paul Gardephe agreed to send class notices to former interns who worked at WMG or its subsidiaries from June 2010 to the present. Gardephe ruled that the former interns were “similarly situated” enough to warrant notifying potential opt-in plaintiffs about the suit. The judge rejected arguments by WMG’s lawyers at Vedder Price that the company’s intern programs were too varied for class treatment, though WMG can still raise that defense as the litigation plows ahead.

Lawyers at Virginia & Ambinder and Leeds Brown brought the case in June 2013, alleging that WMG, its Atlantic Recording Corporation unit and other WMG subsidiaries broadly violated FLSA minimum wage and overtime rules in their internship programs. Last month the same plaintiffs firms won conditional certification of a parallel FLSA class action against Viacom Inc. Vedder Price also represents the defendants in the Viacom case, which is pending before U.S. District Judge Jesse Furman.

So far the momentum in the intern litigation has been with the plaintiffs, who have grown more numerous ever since U.S. District Judge William Pauley III ruled in June 2013 that former unpaid interns at Fox Searchlight Pictures Inc. qualify as employees under the FLSA and New York labor laws. That decision followed a major setback for the plaintiffs in a similar case against Hearst Corporation in May 2013, when Hearst's lawyers persuaded U.S. District Judge Harold Baer to reject ex-interns' class claims.

The Fox and Hearst cases are now being considered in tandem by the U.S. Court of Appeals for the Second Circuit, which has yet to set a date for oral arguments. Not surprisingly, the amicus briefs have been pouring in, with everyone from the U.S. Department of Labor to the U.S. Chamber of Commerce pointing out that the stakes are huge for employers and employees alike. Outten & Golden’s Rachel Bien is representing the plaintiffs in the consolidated appeals. The defendants are relying on Proskauer Rose (for Fox and Hearst) and Neal Katyal of Hogan Lovells (for Fox).

We reached out to Laura Sack at Vedder Price to ask about Tuesday’s WMG ruling, but we didn’t hear back. Lloyd Ambinder, who represents the plaintiffs, also wasn't immediately available to comment. Another lawyer at Virginia & Ambinder, LaDonna Lusher, noted that the firm is also pursuing similar cases against Sony Corporation, Columbia Recording Corporation, and other employers.

For a list of all the major intern class actions and their status, check out this handy chart from ProPublica.