The Dangers Of Broadcast Internships

Did you catch the item about the venerable broadcast journalist Charlie Rose and his PBS program interns? Sued by his interns, it cost Charlie Rose at least $250,000 to settle the lawsuit involving a program that may have been created, at least partially, in satisfaction of the FCC Equal Employment Opportunity Program policy supplemental outreach requirements.

Here's what happened. Not unlike many broadcasters, Rose had a program of unpaid internships; a great experience for a broadcasting student and an impressive résumé builder. After her internship was completed and she left the show, an unpaid intern sued Rose's production company for not having paid her a salary. The company evaluated the law and settled. As a result, Rose and his company will also have to pay back wages for as many as a 189 other former interns, according to the New York Times.

Later, other media articles have reported that Fox and Hearst have also been hit by former interns with similar suits. More recently, reports surfaced of a class-action suit on behalf of hundreds of former NBC Universal interns who worked at MSNBC and "Saturday Night Live" -- and a judge has ruled that former interns for Fox Searchlight could sue for unpaid wages during their internships. It might seem that we're in the midst of an intern revolt, and recent events could serve as a cautionary tale for broadcasters seeking to satisfy FCC EEO requirements and save money in one fell swoop.

Recall that in 2002, the FCC created as its fifth EEO supplemental outreach option the establishment of an internship program designed to assist members of the community to acquire skills needed for broadcast employment, in the belief that such an endeavor would serve the goal of broad outreach by increasing the number of qualified potential employees for all broadcasters in the area.

So, notwithstanding the fact that internships are promoted heavily under FCC policy for its EEO program, and the recognition that unpaid internships may provide excellent on-the-job experiences and launching pad opportunities for students seeking to grab a foothold in an industry where jobs are shrinking, it is also becoming dangerous to have an unpaid internship program without a thorough understanding of the law and creating important legal safeguards. While it might be an opportunity to provide training for prospective employees, it also might expose a company to liability for unpaid wages and overtime.

We asked our labor and employment group for some advice and helpful hints for broadcasters. Here's what we learned:

• The lawsuits are based on the idea that the companies used unpaid interns to perform productive work for which the interns should have been paid. If a suit is successful, a station could be liable not only for the amount of wages due but also an equal amount as liquidated damages as well as the claimant's attorney's fees and costs.
• A station can establish training internships without having to pay the participants, provided the internships are truly training opportunities and not unpaid, entry-level positions. If the employer derives financial gain from an "intern's" productive work, offering only unpaid job experience can lead to significant exposure.

In 1947, the Supreme Court held that voluntary trainees in a weeklong program to train potential railroad porters were not employees under the Fair Labor Standards Act ("FLSA"). In Walling v. Portland Terminal Co. the Court held that "the definition of employee cannot be interpreted so as to make a person whose work serves only his own interest an employee of another who gives him aid and instruction."

• To apply that standard, the Wage and Hour Division of the Department of Labor developed a six-part test to determine when a trainee is not an employee entitled to protection under the FLSA. Under its standard, an unpaid training opportunity must meet each of the following six factors:
  • Training must be similar to that offered by a vocational school;
  • Training is for the benefit of trainees;
  • Trainees do not displace regular workers, but work under close supervision;
  • Employer derives no immediate advantage from the program;
  • Trainees are not entitled to a job upon completion; and
  • Trainee and employer understand that the trainees are not entitled to wages.

While these are not always easy or clear to apply, federal trial and appellate courts have made it even more difficult. Many of them have criticized this six-factor test and opted instead for an individualized analysis identified variously as an economic realities test, a primary benefit test, or a totality-of-the-circumstances test. While the courts have considered some or all the six factors, they have concluded that none is predominant, that the test cannot be applied mechanically, and that all six factors need not be present.

As a result, broadcasters must be very careful in implementing any unpaid internship program. Based on a review of court decisions approving unpaid internships, the following factors weigh in favor of success without financial exposure:

• Program lasts days or weeks, but not months;
• Training is general for the industry, not specific to a company;
• Program follows a training curriculum;
• Company does not profit from the actions of trainees.

How to craft a program that does not profit the company but offers training in what the station does is obviously a tricky formula. Internships are possibly the most beneficial way of meeting the FCC EEO program goals, but considering the recent rash of broadcasting industry intern litigation, establishing an effective internship program should be done only after consultation with legal counsel so that it is crafted to meet federal guidelines.

This column is provided for general information purposes only and should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.