Unpaid interns, and the Wisconsin companies that hire them, are sorting out their options after a recent New York court ruling cast doubts on employers’ widespread practice of relying on eager young workers to perform without pay.
The case at the core of the renewed national debate over unpaid internships was filed by two unpaid interns who worked on the set of the Fox Searchlight Pictures movie “Black Swan.”
A New York federal district court ruled in June that the interns performed the work of regular employees, and their internships did not meet the standards established by the federal Department of Labor.
In Wisconsin, that case gave hope to former unpaid intern Robert C. Weich, III, whose complaint against 540 ESPN Milwaukee is pending with the Wisconsin Department of Workforce Development’s Equal Rights Division.
“I thought that I was wronged,” Weich said. “It’s not really about the money. I want to prevent this for future interns.”
Experts say the “Fox Searchlight” case, as it has come to be known, has led some businesses in Wisconsin and nationwide to monitor its potential repercussions. And it has prompted educational professionals to rethink their roles in facilitating or advising about unpaid positions.
New York attorney Juno Turner. Courtesy of Juno Turner/Outten & Golden, LLP
‘Searchlight’ fallout
The “Fox Searchlight” case rejected the “primary benefit test” — which stated that an unpaid internship was legal so long as the benefit to the intern outweighed the benefit to the employer — in favor of more explicit standards outlined by the Department of Labor.
“The decision is unique in that it is the first time a federal court has decided that unpaid interns are employees and entitled to protections under the Fair Labor Standards Act,” said Juno Turner, the plaintiffs’ attorney in the Fox Searchlight case.
Fox Searchlight has sought to appeal the case to a federal circuit court. But Turner said she is “confident the decision will stand up on appeal.”
If the Fox Searchlight decision stands, it could become a “persuasive authority,” setting an example for other cases filed by unpaid interns in federal courts nationwide.
The FLSA guidelines state that an unpaid internship is permissible if, among other things, it provides an educational environment that benefits the intern rather than the employer, and the intern’s work does not displace the work of paid employees.
Turner said that under these rules, most unpaid internships in the private sector are not permissible in the eyes of federal law.
“It is a rare internship in the for-profit context that provides the educational environment that meets the FLSA standards,” she said.
The ruling is the first favorable decision for interns in a flurry of lawsuits against major media and entertainment companies, including Hearst Corporation, CondeNast, NBC Universal, Warner and Gawker. In July, the PBS talk show host, Charlie Rose, settled a case against him and his production company, offering back wages to approximately 190 former interns.
Facebook chief operating officer Sheryl Sandberg faced criticism and controversy after her non-profit organization, Lean In, posted a listing soliciting applications for an unpaid editorial intern. Sandberg is a well-known advocate for the advancement and equality of women in the workplace.
UW-Madison communication arts professor Derek Johnson said “the narrative that you have to pay your dues to break in is really strong in Hollywood, and the internship is part of that story.” Matt Barnidge/Wisconsin Center for Investigative Journalism
Turner said there is a reason most lawsuits are brought against media companies. Calling it “a bit of a perfect storm” for lawsuits challenging unpaid internships in the media industry, Turner said “glamorous” industries like media typically use more unpaid interns.
Derek Johnson, a communication arts assistant professor at the University of Wisconsin-Madison, agreed with that sentiment. “The media industry is perceived as very glamorous,” he said. “The narrative that you have to pay your dues to break in is really strong in Hollywood, and the internship is part of that story. How do you break into the industry? Get an internship.”
However, the unpaid internship issue is not just limited to the media and entertainment industries. A report by ProPublica, a nonprofit investigative news organization, shows that cases have been brought against companies in the fashion industry, the healthcare industry and against law firms.
In July, an ad-hoc movement started by interns in Washington, D.C., the Fair Pay Campaign, formed to target the White House and other political institutions with the aim of ending unpaid internships in politics. The left-leaning political organization, Campaign for America’s Future, later joined in the movement to stop unpaid internships in D.C.
‘Searchlight’ shines on Wisconsin
Weich, a 28-year-old journalism senior at the UW-Milwaukee, worked as an unpaid intern at 540 ESPN Milwaukee, a sports news and talk radio station, during the fall 2012 semester. He alleges in his complaint that the radio station “gained from my busy work” and that he was “never allowed to actually learn hands on.”
In an interview, Weich said he made promotional materials for the radio station’s publicity events at local bars. “I wasn’t interested in marketing,” he said, so he requested a change. The station then moved him into the sound booth, where he mostly watched employees perform their regular job duties. He learned how to use audio editing programs, and he uploaded audio content to the station’s website.
“The company takes advantage of free help,” he said. “They have 15 to 20 interns at any one time. ESPN has them doing some things that normal employees would do.”
He added that the internship caused him economic hardship and displaced time he would normally have spent on his school work.
Weich claims he did not receive college credit for the internship. ESPN disputes that claim, stating in its response that Weich was hired as an unpaid intern with the understanding that it would be for academic credit, and that station employees coordinated with UW-Milwaukee journalism lecturer Jessica McBride.
“She had no idea I was interning at ESPN,” he said, adding that “I definitely didn’t receive credit.”
McBride and the UW-Milwaukee journalism department declined to comment on Weich’s case, citing academic privacy. 540 ESPN Milwaukee did not respond to several requests for comment in the past month.
Weich’s case is still pending with the DWD, which will strive to assist both sides in reaching a voluntary settlement of the complaint. If Weich is not satisfied, he would have the option of filing a case in state or federal court.
Larry Johnson.” Photo courtesy of Larry Johnson/Hawks Quindel, S.C.
‘Searchlight’ legalese
Turner said that the Fox Searchlight ruling technically does not set a legal precedent for Wisconsin because a New York federal court decision has no binding authority on a Wisconsin federal court. However, the ruling could become a “persuasive authority,” influencing federal court decisions around the country.
Larry Johnson, a Milwaukee-based labor attorney, said that federal law typically establishes “the floor” — the minimum level of protections for workers — while state law adds more protections on top of federal law.
He said federal law trumps state law if state law doesn’t meet the basic standards outlined in federal law. Thus, provided Fox Searchlight is not overturned on appeal, the ruling could apply in Wisconsin.
“The intern cannot fill the place of what another employee would do,” Johnson said. “There are a lot of internships out there that just don’t meet the FLSA standards.”
Turner said academic credit does not make the internship legal if the intern performs work that a normal employee would do. She added, however, that employers may perceive academic credit as a justification for the argument that they are providing an educational environment for the interns.
Staying out of the ‘Searchlight’
The changing internship landscape has caused some Wisconsin media organizations to reconsider their internship programs.
Take, for example, Madison Magazine and WISC-TV Channel 3000, both owned by Morgan Murphy Media, which offer a mix of paid internships, unpaid internships and internships with stipends.
“That’s up in the air now,” said WISC-TV vice president and general manager Tom Bier. “At the time, we believed they (the internships) fit within the legal definition. We started looking at the issue. We just want to make sure we’re in compliance with the law.”
Bier said his company will weigh the costs of paying more interns against the benefits of helping to train students.
“We want to support the educational institutions here and give students educational opportunities,” he said. “The idea is to give the student a real-life experience. It is important that the interns get something out of it.”
Other media organizations saw the writing on the wall several years before Fox Searchlight.
The Capital Times in Madison, for example, restructured its internship program several years ago in response to increased attention to the unpaid internship issue, managing editor Chris Murphy said.
Murphy said the online news website, which also publishes a weekly print newspaper and the entertainment weekly, 77 Square, was advised by its parent company, Capital Newspapers, to start paying interns a nominal wage several years ago.
“I think it was the right thing to do,” he said about the decision to re-examine the internship program. “Those folks were doing real work that needed to be done.”
Murphy said the Capital Times no longer offers internships, cancelling the program when it moved to a digital-first newsroom, a move unrelated to the re-evaluation of the program several years before.
Stephanie Salazar Kann, internship coordinator for UW-Madison’s College of Letters and Sciences, said that a lot of companies are watching and waiting to see the full impact of Fox Searchlight.
“Companies are waiting to see if any copycat cases come out,” she said. “There has been a lot more media attention to the concept of unpaid internships.”
Salazar Kann said the communications industry and the non-profit sector advertise a lot of unpaid positions on the college’s online job-search site.
“Whether paid or unpaid, if you’re not expanding your skill set or your knowledge base, it’s a waste of time,” she said.
Turning the ‘Searchlight’ on a vulnerable population
The possible extension of FLSA protections to unpaid interns would be a significant change in federal law because previously, interns did not share some of the basic protections as regular employees under federal law.
Take, for example, the fact that unpaid interns have not been protected against sexual harassment.
In 1997, a New York federal court upheld a ruling that a former psychiatric center intern, Bridget O’Connor, was not protected against sexual harassment by her employer, because workplace protections did not extend to unpaid interns.
Nor were interns protected against wrongful termination. In 2013, a Wisconsin state court ruled interns are not considered employees under state law.
In that case, the Medical College of Wisconsin required intern Asma Masri, then a doctoral student at UW-Milwaukee, to perform a psychological evaluation of a patient who was considering filing a medical malpractice lawsuit against the hospital. Masri reported the ethics violation to hospital officials, and her internship was terminated soon after.
Masri, who currently works as an instructor at Milwaukee Area Technical College, sued the hospital and lost on appeal. The Wisconsin court ruled that because Masri was not an employee, she was not protected against wrongful termination.
Masri did not respond to a request for comment on this story. The Medical College of Wisconsin said it does not comment on lawsuits.
In another Wisconsin case, an employer was accused of mislabeling a job as an unpaid internship to get out of paying employees minimum wage.
This year, two former servers filed complaints against Diego’s Mexican Cantina in Madison, alleging the State Street restaurant did not pay them for wages earned during training.
In each case, the server did not finish the training period. The owner, Mohamed Barketallah, claimed that their training period counted as an “unpaid internship,” and therefore that he did not have to pay them for their training hours.
One of the servers, Mark Jasinski, a 21-year-old genetics major at UW-Madison, said Barketallah threatened that he would not be paid if he quit. Jasinski quit anyway, and when he requested his paycheck, Barketallah told him his training was an unpaid internship. Jasinski then filed a complaint with the state DWD.
“It doesn’t even make sense,” he said. “Why would anyone want to take an unpaid internship at Diego’s?”
The DWD ruled in Jasinski’s favor, although a dispute remains about whether the restaurant should pay him $7.50 an hour, the restaurant’s wage for non-servers, or $2.33 an hour, the minimum wage for tipped employees. Barketallah did not respond to a request for comment on this story.
‘Searchlight’ reveals uneven playing field
Many experts agree that unpaid internships tend to go to those who can afford to work for free.
“If those (unpaid internships) are the gateways to paid employment,” Turner said, “people who can’t afford them are going to be frozen out.”
Derek Johnson, the professor, agreed with that argument.
“There are tons of people trying to break in,” he said. “And when you have an oversupply of labor you don’t have to pay people. New York and L.A. are two of the most expensive places in the country, and that means that students will self-select into those internships. Arguably, it may be the students who need the internships the least because they already have family connections.”
Not everyone took such a black and white view of the matter, however.
“I wouldn’t say it puts students at a disadvantage,” Salazar Kann said. “It requires students who don’t have financing or national connections to plan ahead a little more.”
Larry Johnson took a different approach, claiming that unpaid internships inhibit job growth.
“If you are taking advantage of an unpaid intern to do the work of an employee, you’re hurting the economy because you’re taking away jobs,” he said.
Turner agreed with that argument.
“If this is work that needs to be done, using labor that’s unpaid takes away a paid position,” Turner said.
Experts say that the expense — and a perception it could hurt their chances in the job market — often discourage unpaid interns from filing legal actions.
“Starting a case against a former employer is not an insignificant undertaking,” Turner said. “It takes a certain type. People who have had enough or people who think it’s wrong.”
Larry Johnson agreed.
“They don’t really want to burn the bridge,” he said.
Unpaid internships prevent worthy persons from lower middle class from gaining valuable experience and inside knowledge of how businesses operate. (Especially show business). This basically reserves positions for the wealthy and is a class or caste system.