A few days ago, two interns who had worked at NBC Universal filed a Federal lawsuit against the company claiming that NBC violated the Fair Labor Standards Act by failing to pay them any wages during their respective internships. One plaintiff, Jesse Moore, interned at MSNBC in 2011; the other, Monet Eliastam interned at Saturday Night Live for two stints in 2012.
This case joins those brought by unpaid interns against such other venerable companies as Conde Nast and Warner Music Group. I first wrote about this issue in 2010 on this blog and the problem has escalated over the years. Fox just recently lost a summary judgment motion on this issue and that case has likely emboldened other interns to step forward and claim they were taken advantage of.
On a moral guideline, the cases come somewhere in between “You shouldn’t bite the hand that feeds you” and “Don’t be a pig.” Certainly interns gain incredible experience and contacts by working at these companies for free during school or on breaks in between. More and more, even graduates are accepting unpaid positions just to get their foot in the door during this harsh economy. The interns are being given insight into an insular world that few people get to be a part of. Last time I checked no one was interning at a West Virginia coal mine. The interns in this case worked an average of 20-25 hours per week. Hardly like a stint at the Triangle Shirt Waist Factory.
But at the same time, these companies are earning billions of dollars in their industries and are accused of using the interns as nothing more than cheap labor. Intern Moore says her job included booking cars and making travel arrangements for correspondents and guests on MSNBC’s morning programs; answering the phones; greeting guests; researching segment details; and providing guests with “dub copies” of the shows in which they appeared. All relatively mundane tasks which don’t require a college degree and which do not prepare or educate you all that much.
Intern Eliastam claims she regularly worked more than 10 hours in a single day (which would also require additional pay under NY’s “spread of hours” labor rules), claims her SNL job responsibilities included obtaining and completing paperwork for “extras” and background actors; filing and processing petty cash envelopes; going on errands for food and coffee; locking down the set to make sure there were no disturbances; and assisting at shoots of SNL skits. Now as a huge fan of SNL, I may take that position right now, but at the same time, these tasks are menial and normally performed by the lowest level employees at a studio.
So where is the line drawn between great experience and slave labor? The Wage and Hour Division of the NYS Department of Labor has come up with a six part test to help determine if someone is an “employee” or a “trainee” for purposes of the FLSA. Here are the factors:
- The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
- The training is for the benefit of the trainees;
- The trainees do not displace regular employees, but work under close observation;
- The employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion his operations may actually be impeded;
- The trainees are not necessarily entitled to a job at the completion of the training period; and
- The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.
Unless all six factors are met, the DOL will find that an employment relationship exists. In DOL guideline letters, summer internships have been found to come under the law even where the students simultaneously received college credit for the internship! In that case, which was decided in 2004, the students worked flexible hours and were told that they would be taught basic marketing and promotional strategies, but they also had to wear company uniforms and it appeared that the company reduced its regular workforce during the summer when the internships were running.
In 2010 I said this on this blog: Understand that these issues normally arise when the DOL makes an on-site visit to a company; most student-interns will not sue the company after they leave for wages (though they legally could if they should have been compensated). How quaint (and prescient). Now its off to the courthouse after your internship is done.
This case against NBC is in federal court and federal courts do not have to apply the six factor test, so courts who are reviewing these cases generally apply a “totality of the circumstances” analysis. That is, they look at the overall picture and try to determine who was the primary beneficiary of the internship experience – the employer or the intern? If the facts make it appear that the employer was getting cheap labor and not really teaching the intern anything relevant, then the courts will find that it was employment not training. If on the other hand, the student benefited from the experience and learned new skills and especially if the internship disrupted the regular business of the company, then the company will be off the hook. On the face of the complaint, it looks like NBC could be in trouble here.
So companies would be wise to plan a little more than usual when running an internship program. They should look carefully at the six factors used by DOL and the several policy guidelines issued by the Dept of Labor on this topic to make sure they don’t find themselves in a “no good deed goes unpunished” scenario.