Unpaid Internships Not Dead Yet

Since a federal judge ruled last month that the unpaid interns who sued Fox Searchlight Pictures were in fact entitled to wages, there have been a slew of assertions that this is the beginning of the end for unpaid internships, and warnings that colleges had best distance themselves from such opportunities or risk unwanted litigation.

But omitted from much of the discussion was a small but crucial fact: the two interns who filed the seemingly groundbreaking lawsuit were not students. They were 40-something men who’d left their jobs to try their hands at film production -- and they were not so much interns as they were volunteers, college officials say.

“They were employees,” Robert Shindell, vice president and chief learning officer of the research and consulting firm Intern Bridge, wrote on his blog. “That’s how the judge ruled it -- and I think he got it right.”

The U.S. District Court’s ruling in the “Black Swan case," dubbed for the film on which the interns worked, gave a boost to the already intensifying legal movement against unpaid internships. Since the ruling, former interns have sued Atlantic Records, Gawker and its publisher Nick Denton, Conde Nast, and the production company that owns the television station Nickelodeon. A previously filed suit against Hearst is making its way through the courts, as are ones against Elite Model Management and numerous others. A lawsuit against the Charlie Rose Show ended in a settlement last year.

But the Black Swan case is the first clear victory for the unpaid intern lobby – and it’s causing a headache for experts who say people are conflating those “volunteer”  positions with the truly educational internships (at least in theory) that colleges help arrange for their students.

“With a true academic internship, there is a built-in accountability between the institution of higher education, the employer and the student,” said Michael True, director of the internship center at Messiah College. “There are nonprofit organizations that can hardly afford to pay their own staff, much less pay an intern. But they get a great experience and the students who are able to do it participate in those and benefit from them.”

In another case heralded as a victory for unpaid interns, a 2011 Pennsylvania State University graduate settled her lawsuit against the fashion designer Norma Kamali. The internship she sued over, however, is one she began in December 2012 (long after she graduated).

In other words, the cases where the interns are making headway in court are the ones where colleges are removed from the process.

“The definition of intern always includes the word student or academic or some form of these two things,” Shindell said in an interview. “[Black Swan] is an employee law case -- plain and simple -- it has nothing to do with internships. But because they added in those words, all of a sudden everybody’s up in arms about it.”

In fact, the U.S. Department of Labor’s guidelines for when a private sector internship can be unpaid and still legal can hinge upon whether the intern is a student. The guidelines, which are not technically law but are a subset of rules under the Fair Labor Standards Act, say that “the more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience (this often occurs where a college or university exercises oversight over the internship program and provides educational credit).”

While the awarding of academic credit is not an acceptable legal basis for making interns fetch coffee all summer without paying them a penny, the focus of the guidelines is highly educational.

Employers are asked to follow six criteria: the internship should be similar to training that would be given in an educational environment; it should be for the benefit of the intern; the intern should not displace regular employees, but work under their close supervision; the employer should not derive an immediate advantage from the intern and on occasion should be impeded by him or her; the intern should not necessarily be entitled to an eventual job; and the employer and intern should understand that the latter is not entitled to wages.

While the Black Swan judge said academic credit was not a major factor in her decision, the fact that the experience wasn’t educational was.

Maurice Pianko, director and lead attorney for Intern Justice, said he would still advise companies to pay all interns to avoid litigation risk. (Pianko was not involved in this lawsuit, but is working on others.) But he acknowledged that it’s far from clearcut.

“I prefer the cases when they’ve graduated and then worked as interns, because then it’s much clearer that they did it and were exploited,” Pianko said. “If they’re a student, it’s much harder to make that case.”

The lawsuits are largely being filed by a couple of firms soliciting former interns who feel they should have been paid. One of those firms is Outten & Golden, where Juno Turner is a lawyer. Turner said she’s representing both student and non-student plaintiffs, and blames colleges for "really facilitating this unlawful practice and at the same time often benefiting from it" when the student pays for academic credit for the work.

“We do tend to see, once we win in one case, then more cases start coming out of the woodwork,” she said. “There’s a growing frustration among young people coming out of school discovering that not only are there very few jobs, but that employers won’t even look at them unless they have an unpaid internship under their belt. And when they show up for the internship, it sure looks a lot like a job.”

Although the majority of internships are paid (66 percent, according to Michigan State University’s College Employment Research Institute), it’s certainly true that unpaid ones are growing in popularity. That’s why colleges do things like establish learning objectives, conduct evaluations and worksite visits, and require memorandums of understanding signed by the student and employer.

With unpaid internships, colleges are often “between a rock and a hard place,” said Ronald Kovach, president of the National Society for Experiential Education.

Internships are a valuable and necessary part of a holistic education, but colleges are dealing with public outcry over the idea and, to be sure, some companies are just looking for free labor. While college officials don't want students associating with those businesses, they can't always stop them, nor do staff believe they should act as internship police.

I think there is something that universities and colleges can contribute, and that is to set up standards with very firm relationships so that everyone wins,” said Kovach, who is also vice president of student services at the American Public University System.

On the Internships list serve that True maintains, the Black Swan case has been a prominent topic of discussion among officials who are quick to point out the differences between what those interns did – answer phones, pick up lunches, track packages, etc. – and what they should have done.

“The idea of an unpaid intern is not always inappropriate,” one career services employee said. “How it is twisted, construed and abused, is.”

Colleges have never been sued for facilitating unpaid internships, Pianko said, nor has the Black Swan case concerned colleges directly.

However, he said, “Corporations employing unpaid interns should certainly be worried about the Fox Searchlight ruling.”