With the summer drawing near and many high school and college students looking to bolster their resumes, a new set of eager-to-please interns will appear in offices around the country, bringing some youthful exuberance to the office. For most, the addition of interns roaming the halls will be a positive experience for all involved. For others, however, in particular employers who may view interns as little more than “free labor,” costly litigation could be lurking right around the corner.

A recent federal district court decision, Grant v. Warner Music Group Corp., 2014 U.S. Dist. LEXIS 65664 (S.D.N.Y. 5/13/14), highlights the potential trouble that a conceivably well-intentioned intern program may bring. In Grant, an attempted class action, the plaintiff and several opt-in plaintiffs, all former interns of defendants, are asserting minimum wage and overtime claims under the Fair Labor Standards Act. More specifically, the plaintiffs allege that they performed work as employees but were mischaracterized by the defendants as unpaid interns.

For example, during a nine-month internship, the named plaintiff allegedly worked approximately 50 hours per week, performed the same type of work as paid employees, and received neither compensation nor academic credit. Finding that the plaintiffs satisfied their initial burden of making a “modest factual showing” that they and potential opt-in plaintiffs were victims of a common policy or plan that violated the law, the court granted the plaintiffs’ motion to disseminate court-authorized notice of the case to members of the putative class action.

In reaching its decision, the court recited the following six-factor test for distinguishing trainees (interns) from employees:

• Whether the internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment
• Whether the internship experience is for the benefit of the intern
• Whether the intern displaces employees or works under close supervision of staff
• Whether the employer that provides the training derives any immediate advantage from the activities of the intern, and whether its operations on occasion may actually be impeded
• Whether the intern is necessarily entitled to a job at the conclusion of the internship
• Whether the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship

The Grant case highlights the importance of ensuring that your internship program does not run afoul of the above six-factor test and, more simply stated, interns are treated as interns. Indeed, adherence to the rules for interns should permit a positive experience that will not later devolve to costly litigation. In such a case, the litigation costs alone could outstrip the costs saved with the free help.

If you have questions about how this decision may impact your business, please contact:  

• Michael Rubin (315.413.5440; mrubin@goldbergsegalla.com)
• Caroline J. Berdzik (609.986.1314; cberdzik@goldbergsegalla.com)
• Sean P. Beiter (716.566.5409; sbeiter@goldbergsegalla.com)
• Matthew C. Van Vessem (716.566.5476; mvanvessem@goldbergsegalla.com)
• Or another member of the Goldberg Segalla Labor and Employment Practice Group.