Experts predict wave of lawsuits in U.S. over unpaid internships

Employers in all industries 'need to take note'

NEW YORK (Reuters) — Two former interns at the New Yorker and W Magazine sued Condé Nast Publications on Thursday in what experts said could be the first in a wave of lawsuits challenging unpaid internships.

The lawsuit comes just two days after a judge found that Fox Searchlight Pictures violated labour laws when it used unpaid interns for menial production tasks on Black Swan, the 2010 film starring Natalie Portman and directed by Darren Aronofsky.

Experts said that decision, and similar lawsuits that are likely to follow, will force employers to reconsider using unpaid interns, first in "glamour" industries such as movies and publishing and then in industries that implemented similar policies to reduce labour costs in a flagging economy.

"This trend is probably going to expand beyond media companies and beyond New York," said Laura O'Donnell, a lawyer at Haynes & Boone in San Antonio who represents management in labour disputes. "I think employers in all industries across the country need to take note."

Thursday's lawsuit was filed in U.S. District Court for the Southern District of New York, the same court that issued the Fox Searchlight decision on Tuesday.

Lauren Ballinger, an intern at W Magazine from June 2009 to October 2009, and Matthew Leib, an intern at the New Yorker from June 2009 to August 2009 and June 2010 to September 2010, allege that Condé Nast violated federal labour laws.

Ballinger was paid a flat rate of $12 per day to organize accessories, run personal errands for editors and make deliveries to vendors. Leib was paid a flat rate of $300 to $500 for each internship and his duties included reviewing submissions to the New Yorker's "Shouts and Murmurs" section, responding to emails sent to the magazine, proofreading and opening mail.

The lawsuit, which seeks a class action on behalf of all affected Condé Nast workers, said the Fair Labor Standards Act required the company to pay an hourly minimum wage.

The law firm Outten & Golden, which brought both the Condé Nast and the Fox Searchlight lawsuits, is identifying individuals who held unpaid internships during the past six years and is reviewing the cases for possible wage-and-hour violations.

The firm is also handling a lawsuit against Hearst Corporation by former Harper's Bazaar magazine intern Xuedan Wang. Although Judge Harold Baer, also in the Southern District of New York, said Wang could not sue on behalf of other interns, the firm is appealing the ruling.

PBS talk show host Charlie Rose agreed to settle a similar class-action lawsuit brought by Outten & Golden late last year on behalf of 190 unpaid interns who worked on The Charlie Rose Show between March 2006 and October 2012.

'Think twice for work without pay'

"These young people are conscious of economic and class issues," Juno Turner, a lawyer at Outten & Golden, said of the Condé Nast lawsuit. "They see that people who are able to do these internships are people of means, whose families are able to support them while they work for little or no pay, they're standing up and saying 'I've had enough of this.'"

A Condé Nast representative said the company has a policy of not commenting on pending litigation.

The Labor Department has developed a six-pronged test based on a decades-old Supreme Court case to determine whether interns must be paid. It takes into account factors that include the educational value of the experience and whether interns displace regular workers.

"The real key to the test is that the internship has to be for the benefit of the intern as opposed to the employer," O'Donnell said.

Although unpaid internships are difficult to track, their prevalence is apparent in an annual survey of more than 30,000 college students conducted by the National Association of Colleges and Employers. For the past three years, nearly half of all interns have reported working without pay.

The 2013 Student Survey found that while paid internships increased the likelihood of receiving a permanent job offer, unpaid interns fared only slightly better than students who did no internship at all. The median starting salary for a newly minted graduate with paid internship experience is $51,930, but only $35,721 for those who completed an unpaid internship, the survey said. NACE's Edwin Koc said that fact pattern was consistent across all academic majors.

Ross Eisenbrey of the Economic Policy Institute, a nonpartisan think tank based in Washington, said would-be interns would be wise to think twice about agreeing to work without pay, even to get a foot in the door.

"You signal to employers that you aren't worth that much if you're willing to work for nothing," Eisenbrey said.

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