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Unpaid Internships May Soon Be A Liability For Companies

Julia Tabar |
June 28, 2013 | 12:53 p.m. PDT


Gawker Media Logo (Wikimedia Commons)
Gawker Media Logo (Wikimedia Commons)
In light of recent lawsuits by disgruntled former interns against corporations such as Fox Searchlight Pictures, Hearst Corporation, Conde Nast, and now the New York-based news and media blog Gawker, some corporations are reassessing their internship programs. Unpaid internships are required to follow the six guidelines in the Fair Labor Standards Act, designed to make sure that unpaid internship programs are for the benefit of only the student, and not the employer. If the employer directly benefits in any way, then the intern should receive compensation for their work. Recent litigation is bringing to light that many programs neglect such standards and use interns to replace paid employees.

ALSO SEE: Unpaid Internship Lawsuits On The Rise

Economist Gary Burtless and CNBC contributor Carol Roth argue that interns' lawsuits may push companies away from internship programs for fear of being sued. This may hinder small businesses who cannot afford to pay their interns. For established corporations such as Fox Searchlight Pictures and Conde Nast, not paying their interns “save[s] employers around $600 million annually,” according to Ross Perlin, author of Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy.

Perlin argues that many unpaid internship programs are taking the place of entry-level positions, serving as menial labor rather than a gateway to potential employment. The recent lawsuits may have several possible outcomes, such as whether interns in creative fields will start getting paid, or whether companies will rescind such programs due to increased liability.  According to Fox Business, “The potential fines and bad press that comes along with a violation of labor laws might not be worth the risk.” 

The educational value of internships is also in question. Students accept internships to enhance their resumes, gain skills and build professional networks, but many find themselves in programs that involve mostly bringing coffee, running errands and other office work. Dan Schnur, Director of the Jesse M. Unruh Institute of Politics and also Professor at USC, points out that “most students understand that some administrative work is inherent as a part of the internship experience, but should only be one part.”

He also stresses that if the internship is not providing the educational experience that was expected, students should know they can leave and try a different company. “We’ve actually pulled students out of internships when it became clear that the internship provider had no intention of giving this student valuable and challenging work to do,” he said. Students then were able to take on positions that fit their career and educational goals elsewhere.

Fox Searchlight is requesting partial reconsideration for the recent court rulings against them on June 11th. They assert that Fox Group and Fox Interactive Media are not affiliated with Fox Searchlight Pictures and Fox Entertainment Group, and therefore the interns were not, in fact, employees under Fox. They also want to limit how many former interns can participate in the class action lawsuit, reducing the span from June 11, 2010 to September 2010, instead of September, 2011. Spokesperson for 20th Century Fox Chris Petrikin says, “We are very disappointed with the court’s rulings. We believe they are erroneous, and will seek to have them reversed.”

Meanwhile, litigation is still underway against Conde Nast while the class action lawsuit against Hearst, Inc. was thrown out due to lack of commonality. Former Gawker interns recently filed a lawsuit against the company on Friday, June 21 alleging that they were doing work such as online writing and researching for no pay.


Reach Staff Reporter Julia Tabar here.



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