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.

Watch Group: Unpaid Internships Cost Jobs and Cause Image Problems

According to a watch group that focuses on internship, getting a job with unpaid internship experience equates to a 1% greater chance of obtaining a job, compared with no internship experience at all.

In a statement released last week, InternMatch stated: “The millions of unpaid internships in the U.S. every year are costing hundreds of thousands of jobs. While paid internships turn into a job 60 percent of the time, unpaid internship experience offers a measly 1 percent bump over no internship experience at all (37 percent vs. 36 percent). This should sound an alarm for everyone defending the ‘pay your dues and you’ll be better off long-term’ argument.”

According to the data the group has collected, paid internships draw more attention from prospective talent and are far more likely to lead to paid positions.  The use of unpaid internships also has a negative association, according to the group.

“Providing interns with an unpaid, under-educational experience can ruin your image as an employer of interns and full-time employees, while creating a paid intern program is good business. It helps to find more talented students (paid positions get 2.7 times as many applications as unpaid roles), helps increase conversion of interns to full-time hires, and creates more buy-in from students during their internship.”

The group concludes, “By not paying interns and allowing students to ‘pay their dues,’ businesses are actually setting themselves up for serious legal troubles.