Full House Of Interns? Design Your Program To Avoid Litigation.

Standard Disclaimer: Vidar provides posts in this blog as general information. This is not meant to be specific advice and your business should always talk directly with a lawyer about your individual business needs.

This week, a former unpaid intern filed a class-action lawsuit against Mary-Kate and Ashley Olsen’s company Dualstar Entertainment Group. One of my clients sent me the story and thanked me for helping them design an internship program that would avoid this kind of problem. Company internships are something I have been talking to my clients about for years. The law and court decisions are changing and making it harder on companies who run unpaid internship programs. Companies that have internship programs need to design them appropriately or face substantial litigation risk.

What Is This Case About

The point of this post is not to try to dig in to the facts of the case against Mary-Kate and Ashley. As the case was only just filed, it would be impossible to provide much analysis, However, I know that some readers will want an initial reaction. So, here it is:

1. Dualstar Entertainment Group has issued a blanket denial of all the allegations in the suit. Dualstar has had no opportunity to present its side, so everyone needs to keep that in mind.
2. The allegations, if proven, are a problem for an unpaid internship program, specifically, the plaintiff alleged: lack of pay, lack of educational focus, and abusive behavior.

The case will likely not be resolved for years, but the initial allegations appear to be a problem.

Can My Company Still Have An Unpaid Internship Program?

As I have been telling my clients for years, unpaid internship programs need to be carefully designed. In many industries, there is a lot of pushback on this concept because breaking-in to those industries has historically required an unpaid internship. I understand that. Unfortunately, the law and court decisions means this thinking needs to change.

You can absolutely have an unpaid internship program at your company. You just need to make sure the program fits within the new legal standards.

So, What Should I Do?

The key idea for an unpaid internship program is that it should be designed to primarily educate and benefit the intern. I know for some of you, this is going to seem like a strange concept, but it must be the focus of your program. The basics of an education focused unpaid internship program include:

• Focus on educating the intern on your industry
• The company should be giving more to the intern than it receives from the intern’s work. In many cases, this means that having the intern is actually a hindrance to your business.
• The intern should not be used to replace a paid low-level employee.
• Unpaid interns are not free labor! You have a responsibility to provide an educational benefit to your unpaid interns.

Would you like to get an intern to help you with some low level tasks without the need to hire a full-time employee? Fine. Just make sure it is a paid internship.

What Is The Real Risk?

The case against Mary-Kate and Ashley Olsen and their company is the perfect example of the risk of an improperly designed unpaid internship program. For the most part, your unpaid interns will be happy and will agree to the arrangement. However, if there is ever even one intern that is unhappy, that person can bring a class-action that can have very large potential damages. Your program may go on without incident for years. But, when that one person complains, it could mean you are on the hook for damages for every intern who has ever worked for you.

Bottom line: unpaid internships are fine if they are primarily for the benefit of the intern rather than for the benefit of the company. If you want a temporary worker to do low level jobs at your company, pay the intern.

If you have questions or concerns about your internship program, you should discuss it with your business attorney.