After a spate of recent lawsuits, some experts warn that more will follow as unpaid interns challenge their exemption from minimum wage in court.
Earlier this month, federal district court judge William Pauley ruled that for-profit Fox Searchlight Pictures, Inc. cannot escape its obligation to pay the minimum wage by calling its employees "interns."
The ruling strikes a hard blow as thousands of employers have gotten used to an unpaid entry-level workforce comprised of interns. The practice became more widespread during the recession, with companies replacing laid-off workers with unpaid interns.
Employers argue that internships are a benefit to the intern as a learning experience, as long as the intern is receiving college credit. Young workers, however, are increasingly accepting unpaid internships after graduation.
But in the ruling against Fox Searchlight, Pauley held that a student intern is paying tuition to the college to receive credit from the college, and that has nothing to do with a company fairly compensating the intern. An intern who works without pay and also pays tuition would be at a disadvantage.
This case and the settlement of a similar suit against TV anchor Charlie Rose have led to a string of claims on behalf of unpaid interns. Recently, three interns filed suit against Gawker alleging they had each worked at least 15 hours per week writing for the company's blogs and were paid "not paid a single cent."
Al Jazeera’s US operation ended its unpaid internship program just weeks before the Fox Searchlight decision was made, in anticipation of similar actions from other interns.
The US Department of Labor’s recent restatement of the 60-year-old rules regulating internships and training, Fact Sheet 71, lays out the rules for what makes an intern exempt from minimum wage.
Factors include whether the internship is vocational education, whether the intern does work a regular employee would normally do, and whether the employer gets an immediate advantage from the work.
Companies can lessen their risk by working directly with a high school or university to hire student interns.
Unpaid internships are not illegal in government or nonprofits, and as a result, are inaccessible to many who could not afford to take them. Democratic Congresswoman Suzanne Bonamici is preparing legislation that would fund stipends for unpaid internships in government and nonprofits, meant to offset the cost of relocating to Washington, D.C. or state capitals.
Some schools are now offering stipends to students who take unpaid internships at for-profit companies, a practice long common in the arts and nonprofits. University of Richmond created more than 100 new fellowships this year for student interns at for-profit enterprises.