Daily Journal Publishes Gary McLaughlin, Mark Curiel Article on Intern Class Action Suits

“Confusion in rise of intern lawsuits,” an article by Akin Gump labor and employment partner Gary McLaughlin and senior counsel Mark Curiel has been published by Daily Journal.

The article discusses the rise of class action suits filed by individuals who have worked as unpaid interns at companies and claim they were “denied minimum wages, meal and rest breaks, and other rights and benefits required of regular employees.”

The authors trace the litigation trend from a case in New York of interns working on the film Black Swan who sued Fox Searchlight, through a string of putative class actions, on both coasts, involving interns at the Hearst Corporation, MGM and other companies and note that, in both New York and California, “the available legal authority…is largely limited to labor commissioner guidance that has yet to be fully tested in the courts.”

While there have been initial victories and defeats (along with sizeable settlements) for plaintiffs in these cases, several employers have asked courts to wait, as both the Fox Searchlight and Hearst decisions are on appeal with the 2nd Circuit.

The article then discusses a 2010 opinion letter from the California Division of Labor Standards Enforcement (DLSE), in which the DLSE “adopted the same test as the DOL in that it generally inquires, inter alia, whether the interns are receiving the benefit of an educational training experience, or the purported employer is simply receiving the benefit of free labor.”

The DLSE’s application of this six-factor test to evaluate the placement phase of a nonprofit’s technical skills internship program found that, while that phase involved classroom hours, the remaining activities “involved what appeared to be real work…[b]ut under the ‘totality of the circumstances,’ the program was exempt from wage and hour laws.” The DLSE “viewed the placement phase as a training application of the skills learned during the classroom phase,” and, because the work involved significant one-on-one training and substantial supervision and remained tied to earning college credit and resulted in a certificate, it “predominantly benefitted the interns.”

The authors note, “Unfortunately, there is little case law evaluating the proper standard to be applied to trainees and interns under California law. Further, the DLSE's more balanced approach is only persuasive and not binding authority on the courts. Still, at least some state and federal courts in California have endorsed the DLSE's approach, as opposed to applying the factors rigidly or applying other common law tests of employment.”

They conclude that, because the stakes in the potential class actions are high, California employers across industries “should proceed with caution with any unpaid internship or trainee programs, especially when they do not have the same type of formality and structure as the program evaluated by the DLSE.”

To read the full article, please click here.