Are You Prepared to Manage Your Intern Program in the New Legal Landscape?



By Megan Headley


As an HR manager, you may not have found yourself thinking much about your company’s internship program. After all, you have your hands full with “real” employees, right?


Not so fast. According to Stuart Lander, chief marketing officer for CareerArc Group, parent of Internships.com, seven out of 10 internships turn into fulltime jobs. As a result, he says, “An internship should be an experience both for the student and the employer.” For the employer that experience should be about discovering whether or not this individual is a good fit for the company culture and the type of person who can help move the company forward. For the student, it’s about exploring a potential career.


While more often than not your company internships can be the source of a strongly symbiotic professional relationship, there also is the potential for an HR nightmare. In fact, not treating your interns like employees could have your company facing serious trouble, if a new crop of internship-related lawsuits is any indication.


The Legal Scene


More than 20 internship-related lawsuits have been filed in 2013 alone. These suits amped up following the June 2013 decision from a New York district court regarding "Glatt v. Fox Searchlight Pictures Inc.," which decided that the film production company illegally failed to pay wages to its interns. The suit was granted class action status.


Better known as the “Black Swan” lawsuit for the $300 million grossing film on which the plaintiffs worked, the complaint had alleged that the unpaid interns were owed the applicable minimum wage rate for all hours worked, overtime for the hours that they work over 40 in a workweek, spread of hours pay on days on which they work more than 10 hours and reimbursement for the use of their personal cell phones and laptop computers on film production work. Plaintiffs’ attorney Outten & Golden LLP further alleged the production company violated the federal Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL) by these actions.


In a news release issued by the attorney, attorney Elizabeth Wagoner of Outten & Golden LLP, stated: “Most interns at for-profit corporations have the right to at least minimum wage and overtime when they work more than 40 hours a week. Our clients, and the hundreds of workers they seek to represent in this action, want to send a message to companies throughout the country: when interns perform productive work, they must be paid a legal wage.”


Among the more recent cases to spring up in the wake of the June decision is one involving publisher Conde Nast. The class action complaint, filed in June 2013 by Outten & Golden LLP on behalf of two former interns who worked at W Magazine and The New Yorker, accuses the publisher of failing to pay interns proper wages for the work they performed. The lawsuit contended that the interns are covered by the FLSA and NYLL, which require that interns engaged in the operations of the employer or performing productive work benefit the employer and must be paid the minimum wage even if they receive some benefits in the form of a new skill or improved work habits.


Although the lawsuit was still pending as of press time, the publisher announced in October 2013 that it would cancel its internship program, removing a valuable resource for rising magazine stars and the publisher as well.


Protect Yourself


Sure, these lawsuits revolve primarily around larger companies at present, but it’s best to take a look at your own intern program to determine that you’re providing the right experience. The good news: there’s no reason to be alarmed about the bad press being given to the classic internship.


“The most important thing to do when you hire an intern is to have a good program,” Lander says. What does that entail? “[Making] sure you’ve got quality work for the intern and to make sure that you mentor the intern as well because the internship in itself is an experience,” he suggests.


Landers also offers a few keys for a successful program. “For both parties to make it a success you need to have a well thought out program with good quality work,” he says. Simple, right? It should be, since managing an intern should follow the same rules of thumb as hiring any new employee. It’s a matter of being prepared.


“Really it’s very much the same as hiring someone to work in my marketing department and the day they get in they don’t really know what to do so they sit there twiddling their thumbs. Even more so,” Lander says, “as a student who hasn’t been in the work environment before and is looking for guidance and also wanting to make sure they get something out of it since this is the type of career they want to pursue.”


In addition, experts at Chubb Specialty Insurance, provide the following guideline to consider when constructing your internship:


  • The Fair Labor Standards Act. Seek legal counsel and make sure your internship programs comply with the FLSA. The Department of Labor outlines specific criteria that must be met in order for a program to qualify for unpaid status. While businesses may believe they have met all the necessary guidelines, they may find that more often than not, they don’t.
  • Formalized internship program. Utilize your human resources and general counsel departments, in conjunction with outside counsel, to establish clear documentation on what your internship program provides, including a detailed description of the internship, the training experience the interns will receive, as well as an acknowledgement that the program complies with labor laws. Upon hiring, make sure all interns receive a copy of an employee handbook explaining your harassment and anti-discrimination policies; this can help mitigate the risk of a liability lawsuit against the company by another employee, customer or vendor.
  • Academic Credit. Many unpaid internships provide academic credit in exchange for an intern’s work. However, this is not necessarily enough today. In the landmark “Black Swan” internship lawsuit, Judge William H. Pauley III ruled that academic credit and unpaid internships are not mutually exclusive, paving the way for significant changes in the way many organizations must compensate interns.

What If I Can’t Pay?


Despite the noise of these lawsuits, unpaid internships are unlikely to disappear anytime soon.


Since the 2010 launch of Internships.com, Lander says, “We really haven’t seen much change in more or less unpaid internships—it’s been pretty steady. What we do know is that paid internships obviously have a significantly higher application rate.”


By doing your due diligence and ensuring that your company’s interns are getting a reward for their time in terms of professional growth, then there’s no reason you should have to nix the source of this useful preview into a professional relationship.


About the Author


Megan Headley is a freelance writer based in Fredericksburg, Va. She can be reached at rmheadley3@gmail.com.