Unpaid interns have been on the Department of Labor’s hit list since 2010. I’ve warned employers that most unpaid internships have gone the way of the dodo, and you should be paying your interns at least the minimum wage, and overtime, for hours worked in excess of 40 in a week.
Now, we have some meat to put on the bones of this information. In Grant v. Warner Music Group Corp. (S.D.N.Y. 5/13/14), a former student intern for Warner Bros. Records sought a nationwide collective action on behalf of all similarly situated student interns, claiming that the company misclassified him exempt from the Fair Labor Standards Act’s minimum wage and overtime requirements. The named plaintiff alleged that he typically worked 50 or more hours in a week performing the same type of work as paid employees, but was not paid and did not receive academic credit.
The FLSA only requires a “modest factual showing” for a court to certify a putative collective action, and authorize opt-in notices be sent to potential class members. In this case, the court concluded that Grant made that showing by putting forth facts that he and others suffered under a common policy or plan that violated the FLSA. Warner Bros. now has a nationwide wage-and-hour lawsuit to defend.
The burden for a court to certify a collective action under the FLSA is low, yet the risks are high. Many issues under the FLSA are fact-specific and rest on razor-thin distinctions. Unpaid interns, however, are the low-hanging fruit of the wage-and-hour laws. The money you will spend defending a wage-and-hour collective lawsuit will dwarf the money you would save by classifying your interns as “unpaid.” If you use the services of interns, pay them, unless they are students, receiving academic credit for the internship, and the work they are performing for you is bona fide training and instruction to them. Otherwise, you are taking a huge gamble that is difficult to win.