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5 Lessons From NBC's Unpaid Intern Settlement

By Daniel Taylor, Esq. on October 24, 2014 11:28 AM

Broadcast network NBC has agreed to settle claims filed by former interns who claimed the network's unpaid internship program violated federal and state labor laws.

A group of interns led by ex-"Saturday Night Live" intern Monet Eliastam filed the class action lawsuit last year alleging that unpaid interns were being used in place of normal workers at NBC. The suit also alleged that NBC's internship program failed to provide academic or vocational training. If approved by the judge in case, the $6.4 million settlement would be distributed among thousands of former interns, reports The Hollywood Reporter.

What can business owners learn from NBC's settlement in this case? Here are five things to remember when it comes to unpaid interns:

  1. The internship must be an educational experience. Under the federal Fair Labor Standards Act, unpaid internships must provide similar training to that which would be given in an educational environment.
  2. Unpaid interns can't displace paid employees. Unpaid interns should work under the supervision of existing staff, but should not be used as a replacement for paid employees.
  3. Internship must be for the benefit of the intern. An unpaid internship should not be considered a mutually beneficial arrangement, but rather an experience that primarily benefits the intern.
  4. Make it clear that an internship will not necessarily lead to a paid position. It should be made clear that the internship is not a guaranteed path to a paid position or a trial period for potential employment.
  5. Have interns sign a written agreement. Like employees, it's best to require interns should to read and sign an agreement that makes it clear what their internship will and will not encompass. If your business doesn't have an internship agreement on file, an employment law attorney can help you draft one.

Under the terms of the settlement in NBC's case, the lead plaintiff will receive a $10,000 payment. Most other members of the class will receive an estimated $505 payout, according to The Hollywood Reporter.

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