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Posted on Wednesday, November 27, 2013

Intern or Employee? Don’t Find Out the Hard Way

Unpaid internships have become a prevailing part of the corporate landscape.  They serve as a means for students and recent graduates to gain experience in their chosen fields and give businesses the opportunity to develop relationships with new talent.  What many do not realize, though, is that the intern-business relationship is governed by a network of state and federal laws that, if ignored, can lead to very expensive consequences.

Recently, Fox Searchlight Pictures, P. Diddy’s Bad Boy Entertainment, The Hearst Corporation, Condé Nast, and other businesses have been forced to grapple with the effects of such laws.  Each of these companies has been sued by former unpaid interns who contend that they are entitled to back wages and benefits because of the nature of the work performed.  NBCUniversal is one of the most recent high-profile targets, and recently filed a response in a class action suit that may end up costing the company a tremendous amount of money.

In their suit, former NBC interns Jesse Moore and Monet Eliastam claim that NBC violated portions of the Fair Labor Standards Act and several state regulations in failing to pay wages for kinds of work that must be compensated under the law.  The Department of Labor has stated that interns may only work without pay in certain situations, and the NBC interns argue that because their work at the company does not fall within the protected categories, they are entitled to back pay.

The NBC suit and others like it have touched off a firestorm in the business community, with some calling out for better treatment and fair compensation for under-advantaged interns, while others argue that businesses should jettison their intern programs altogether to avoid potential liability.  One thing is certain: the issues raised in the intern lawsuits are not going away ‒ Fox lost during the first stage of its lawsuit and now has an appeal pending, other companies have settled, and the trend in intern lawsuit filings shows no signs of slowing.  In the end, these stories highlight how important it is for business owners to understand the laws that govern the business-intern relationship; when it comes to interns, it is definitely better to be safe than sorry.

Ryen Rasmus is an associate attorney for the Washington, DC regional business law firm Berenzweig Leonard, LLP.  He can be reached at RRasmus@BerenzweigLaw.com.

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