Unpaid Internships: Nice Work If You Can Get It

Over the years, the music and entertainment industry has developed into a host of companies and organizations performing an endless array of specialized services. But in an industry built on various relationships, one type of relationship is universally present in almost all facets of the music business: the employer-employee relationship, including variations on the theme. Some people work for others; some people hire others to work for them. Depending on which side of the relationship you are on, state and federal laws impose various obligations and protections on the music industry, like any other industry.

During the past several years, one employment practice has come under scrutiny: unpaid internships. In the music business, unpaid internships are often considered part of the process of paying one’s dues. Some companies hire unpaid interns as part of a program that offers college credits to students, where interns are given opportunities to gain insight into the operations and business practices of the companies that hire them. On the other hand, some companies hire unpaid interns for entry-level positions during which the interns perform regular job duties for the chance to gain experience to put on their résumés. The interns can also expand their network by being allowed access to the key people working at the company. At many companies within the music industry, unpaid interns are common, although the internships themselves can be extremely competitive.

By 2010 the “great recession” made unpaid internships an attractive option for many companies seeking to cut overhead in a tough market. In light of the expansion of unpaid internship programs at many companies, the U.S. Department of Labor, Wage and Hour Division weighed in on the issue to give employers guidance on the criteria that must be met when hiring unpaid interns.

As a starting point, the Fair Labor Standards Act of 1938 (FLSA) provides that, unless an exemption applies, individuals who are “suffered or permitted to work” are considered employees and thus must be paid at least a minimum wage for all hours worked.¹ When it comes to internships, individuals who work for private, for-profit companies are presumed to be employees under FLSA, and should be paid at least minimum wage and overtime as necessary, unless the following criteria are met to make it a valid unpaid internship:

1. While it includes operation of an employer’s facilities, the internship is similar to training, which would be given in an educational environment.

2. The internship experience is for the benefit of the intern.

3. The intern does not displace regular employees but works under close supervision of existing staff.

4. The employer that provides the training derives no immediate advantage from the activities of the intern, and its operations may sometimes even be impeded by the work of interns.

5. The intern is not necessarily entitled to a job at the conclusion of the internship.

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.²

                   

In analyzing whether a position fits the criteria of an unpaid internship, the educational aspect is a focal point. Some factors that can help establish the educational aspect of an internship could be that (1) college credits are offered; (2) the internship involves classroom time; (3) the employer teaches the intern skills that are transferrable to other companies or industries and that aren’t limited to the business of a particular employer; and (4) interns are assigned to shadow employees who take on a role akin to mentors. Under these criteria, an unpaid intern may have the opportunity to learn directly from key people at artist management companies, recording studios, record labels, concert promoters, radio stations, instrument makers, and various other music companies. Early in a person’s career, such an opportunity can be priceless.

Where education is the focus, an intern probably does not perform routine work of the employer’s business on a regular basis. For example, interns who are filing, performing clerical work, assisting customers, working as a receptionist or an assistant are not likely to qualify as unpaid interns. Thus, tasks such as making coffee, running errands, and answering phones are unlikely to be suitable for an unpaid internship under the regulations.

   Another part of the analysis should consider the intern’s role in relation to other employees at the company. Individuals performing a limited set of duties and reporting to the same supervisor as other paid employees will likely be considered employees. You could also ask, “If the intern were to quit, would someone be hired for pay to replace this person, or would existing employees have to work additional hours to perform the intern’s duties?” If the answer is yes to either question, the position is not likely to qualify as an unpaid internship and instead indicates an employment relationship.

The U.S. Department of Labor’s criteria under the FLSA form the minimum protections under the law that applies throughout the United States. Some states, such as New York, have imposed additional requirements and/or factors to consider. Thus, it is critical to look to the federal law under FLSA as well as the state and local laws that may also apply.

Since the Department of Labor clarified the requirements under FLSA, several lawsuits have been filed seeking at least minimum wages for work done by individuals hired as unpaid interns. Notably, in September 2011, Eric Glatt and Alexander Footman, who worked as unpaid interns on the production of the movie Black Swan, filed a class-action lawsuit against Fox Searchlight Pictures Inc. in Manhattan federal court.³ In February 2012, Xuedan Wang, who was a “head accessories intern” for Harper’s Bazaar magazine, filed a similar lawsuit against the Hearst Corporation.⁴ Both lawsuits allege multiple violations of federal and state laws that provide for minimum wage and overtime compensation.

This area of the law affects both employers and employees within the music business. As Berklee students and graduates transition from school into careers in the entertainment industry, they want to establish toeholds in various cities and facets of the business. At some point, many are likely to work as unpaid interns. Some will be grateful to gain experience that may secure a paying job at another company down the road. Others will intern with the hope that they will be hired into a paid position after completing their internship. Others still will use the opportunity to make as many connections as they can to help with their own careers. The availability of people willing to do anything to gain entry into the music business is likely to prove tempting to employers that are contending with a tough economy.

Ultimately, there is a great deal at stake with unpaid internships for the companies looking to hire as well as for those looking to break into the entertainment business. But when the unpaid internship offers opportunity to learn in the real world, from the actual people who are involved in the nuts and bolts of the music industry, the unpaid internship is nice work—if you can get it.*

 

*The information provided in ths article is intended for educational purposes only and should not be construed as providing legal advice regarding an individual situation. No attorney-client relationship is created between the reader and the author.

 

Endnotes

1. Fair Labor Standards Act, 29 U.S.C. § 201 et seq.

2. U.S. Department of Labor, Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act, Apr. 2010, available at http://www.dol.gov/whd/regs/compliance/whdfs71.pdf (last visited April 4, 2012).

3. Glatt v. Fox Searchlight Pictures Inc., 11-cv-6784-WHP (S.D.N.Y. 2011).

4. Wang v. The Hearst Corp., 12-cv-0793-HB (S.D.N.Y. 2012).