In June, magazine publisher Conde Naste was sued by former interns for paying less than $1 an hour and violating state labor laws. The plaintiffs are seeking a class-action lawsuit on behalf of all previous interns. The suit alleges the publisher made the interns work 12 hour days for a $12 stipend. Amid the lawsuit, Conde Naste ended the internship program.
Under federal law, every employee in America is entitled to a minimum wage, additional compensation for overtime, and other benefits. Workers are protected by worker’s compensation laws, discrimination laws, employment benefits, state labor laws, and unemployment insurance coverage. Only under special circumstances, can there be exceptions. Internships are technically an exception, but to qualify as an internship, organizations must meet six criteria. These criteria were detailed in the case of Walling v. Portland Terminal Co. as decided by the Supreme Court:
- 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.
- The internship experience is for the benefit of the intern.
- The intern does not displace regular employees, but works under close supervision of existing staff.
- The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded.
- The intern is not necessarily entitled to a job at the conclusion of the internship.
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
For the exemption to apply and an intern not be paid, all of those criteria must be met. Those criteria are difficult to meet, so it is unwise for an organization to have unpaid interns. There is also a strong business case for having paid interns. The return on a company’s investment is very strong. Paid internships make companies more likely to recruit, select and retain top talent. Paid internships also do a service to the industry by cultivating future leaders. When paid internships are done correctly, organizations are getting fully qualified staff at a fraction of the price, making paid internships an effective method of augmenting a workforce.
Conde Nast must have realized they were not in compliance with these six criteria, so they shut down their intern program in the midst of a lawsuit. If they started paying interns after the lawsuit was brought (which is I expect they would have preferred to do) it would act as an admission of guilt, leading them to lose a costly class action lawsuit. Let Conde Nast be an example to anyone who runs an intern program, if you’re not paying your interns and giving them every right your other employees have, you may wind up in court and out of an intern program.