Unpaid Interns Settle Lawsuit for $250,000

Unfair competitionU.S. companies save $2 billion every year by not paying interns the minimum wage according to journalist Ross Perlin. Although the use of unpaid interns is not necessarily illegal, the Fair Labor Standards Act and California law place strict requirements on internships to ensure that employers do not merely shift the work of paid employees onto unpaid interns. The recent $250,000 settlement for interns of Charlie Rose, Inc., the production company for PBS talk show host Charlie Rose, demonstrates the turning tide in the use of unpaid interns.

Charlie Rose Lawsuit and Settlement

Former Charlie Rose intern Lucy Bickerton, first filed the lawsuit in spring of 2012. Bickerton was a student at Wesleyan University when she allegedly was put to work for the Charlie Rose show for 25 hours a week during the summer of 2007. Her and approximately 189 other people who interned at the Charlie Rose show purportedly were required to perform substantive work that included performing background research on guests, assembling press packets, cleaning and breaking down the set, and escorting guests in the studio.

Although the production company and Charlie Rose both claimed that they did not violate minimum wage laws, they eventually agreed to pay the interns $110 per week that they were employed. The interns, on average worked 6 hours a day 2.5 times per week, which would roughly equal a little more than $7 per hour.

The settlement does not automatically apply to all former unpaid interns at the Charlie Rose show, each intern must opt in by filling a claim to ensure that the money goes to the proper individuals.

U.S. Department of Labor Standards for Unpaid Internships

According to the U.S. Department of Labor (DOL) unpaid internships are only permissible as part of an educational training program. Although academic credit is not necessarily required, one key factor in all unpaid internships is that the main benefit should go to the intern, not the employer. The intern’s services should add little immediate benefit for the employer; in fact the employer’s investment in training the intern may in many cases even cost the employer more than the value that the intern is providing to the employer. Unpaid interns must also not primarily take over the duties of regularly paid employees or even supplement the company’s regularly existing employees. Of course, if the employer pays the intern, these guidelines do not have to be followed.

Does the Charlie Rose Case Foreshadow Increasing Lawsuits Against Employers Using Unpaid Interns?

Lawsuits in the entertainment industry have become increasingly more common. In June a Federal court in New York ruled that interns of the film “Black Swan” had to be paid the minimum wage by Fox Searchlight Pictures. Similar lawsuits have now been brought against Condé Nast Publications, NBC Universal, Viacom, Sony, Donna Karan and other big name companies.

Some have argued that many employers will no longer use unpaid interns because of these lawsuits. However, this strategy may not be enough to limit employers’ exposure to liability from these lawsuits. In California the statute of limitations for minimum wage claims is generally 3 years.

Call an Experienced Orange County Business Defense Litigator

Tony T. Liu is an experienced business attorney. If you are facing liability for the use of unpaid interns contact the Law Offices of Tony T. Liu by calling (714)415-2007.