Class drop-out tries to upset NBCUniversal settlement.
Spring break is fading in the rear view. Summer’s just around the corner. Soon the interns will be flocking to your door – if they haven’t already jammed your inbox – all looking for an opportunity to add a way cool media-related internship to their résumés.
So it’s a good time to remind you that you should think hard about whether you need to pay those interns instead of claiming that their “compensation” consists solely of school credit. I specifically use the word “compensation” and specifically put it in quotes because, if you’ve read any of our prior posts on this topic, you know that claiming school credit as interns’ compensation is a recipe for disaster. You’d be much better off if you were to take the time to study the Department of Labor’s Fact Sheet # 71: Internship Programs Under the Fair Labor Standards Act. That way you’re more likely to offer an internship program that falls on the right side of the “trainee/employee” line.
And being on the right side of that line is important, because being on the wrong side can be very expensive. Just ask NBCUniversal.
They got hit with a suit by three interns back in 2013. The suit blossomed into a class action, with thousands of other interns jumping on the bandwagon. The next thing you know, NBCUniversal is agreeing to settle out for $6.4 million. And even that may not be enough, because at least one intern in the plaintiff class isn’t happy with the settlement.
Listen to the words of Dina Agusta, intern-turned-litigant. Last month she notified the Court that she objected to the settlement. The apparent terms of the settlement took $1.2 million or so off the top for the lawyers, with the rest allocated among the former interns themselves. Five of the plaintiffs would receive payments ranging from $2,000 to $10,000; the rest would get about $500 per internship. This didn’t sit well with Ms. Agusta, one of the $500 ticket-holders. In her letter she details various aspects of the settlement that appear unfavorable to the intern-plaintiffs, and wraps up by saying:
I would be willing to risk the low ball offer and go to trial on this matter. … I wonder how many other class members when presented with this analysis would concur with my reasoning.
It must be said that Ms. Agusta is acting on the advice (and with the continued pro bono representation) of her attorney/father. Still, having pointed out weaknesses she perceived in the settlement, has she led others to join her in opposition? Maybe not. But my guess is that at least a few individuals who were able to score a highly sought-after internship with a famous media company did so on the back of family connections. More than likely, those from prominent families probably count at least a lawyer or two among their kin.
But even if they don’t, the word is out. Lawsuits continue to be filed. Settlements continue to occur and judgments continue to roll up. And if Ms. Agusta’s battle cry is heeded by other interns, lawyer-engineered settlements that happen to be particularly lawyer-friendly may not be as readily available down the line.
I’m not saying that you absolutely have to pay your interns this summer (or any other time). But I am saying that, in my experience, most media companies have tended to rely on the tried and true “credits instead of cash or checks” formula when it comes to internships. Even if that approach may have held water previously, it has recently developed leaks galore. Given the cost of litigation – especially litigation that goes for almost two years, seems settled for $6.4 million and then may still result in more litigation – it makes simple financial sense to consult with an attorney to be sure that your internship program fully complies with all relevant federal and state employment laws. (Note: The FLSA does provide some exemptions for some smaller companies; an expert should be able to confirm whether or not any particular company rates an exemption.)
[One interesting sidenote: In an earlier post I mentioned that one law firm in particular happened to represent intern-plaintiffs in a number of similar cases directed at big media companies. This was presumably not coincidental, because the firm was also responsible for a website, aptly-named www.unpaidinternslawsuit.com, seemingly designed to bring more potential plaintiffs in the door. That firm repped the intern-plaintiffs in the NBCUniversal case, and thus stands to rake in nearly $1.2 million if the settlement is approved. It’s also the firm against which Ms. Agusta rails with considerable ferocity in her letter to the Court. It would appear that the firm is now standing in Dr. Frankenstein’s shoes: its creation, the Class Action Intern-Plaintiff, originally seemed within the exclusive control of the firm. But, like Frankenstein’s monster, that creation (or, at least, one iteration of the monster, i.e., Ms. Agusta) has now turned on its creator. That’s probably not good news for the firm, or for media companies with flawed intern programs.]