Yet Another Unpaid Intern Lawsuit Settles: This Time, It's Viacom

Media giant Viacom has reached a settlement in a class action lawsuit brought by former unpaid interns of the company.

The terms of the settlement have not yet been disclosed, according to The Hollywood Reporter. But Viacom -- whose holdings include MTV, Paramount Pictures and Comedy Central -- is just the latest media company to have an internship policy come back to bite them in the form of a class action lawsuit.

What did Viacom allegedly do wrong, and what can small business owners learn from this case?

Viacom Accused of Replacing Workers with Unpaid Interns

The Viacom lawsuit was granted class action status in April by a U.S. district court judge. In the opinion, the judge wrote that the plaintiff, a former unpaid intern at MTV, had shown sufficient proof that interns at the company may have been "victims of a common policy to replace paid workers with unpaid interns" and may be able to recover unpaid wages.

Under the federal Fair Labor Standards Act, unpaid interns generally cannot displace regular employees. Rather, interns are supposed to work under the supervision of staff, gaining experience that is for the intern's benefits but not necessarily for the benefit of the company.

Unpaid Internship Rules

With the new year (and a new semester) upon us, now is a good time for business owners to remind themselves about the criteria that unpaid internships must meet under federal labor rules. These include:

1. The internship must be similar to training that would be given in an educational environment.
2. The internship must be for the benefit of the intern.
3. The employer providing the training must derive no immediate advantage from the activities of the intern.
4. The intern must not replace regular employees.
5. There must be no guarantee of a job following the completion of the internship.
6. Both parties must understand the internship is unpaid.

Failure to follow one or more of these rules may expose your company to a potentially costly lawsuit by both current and former interns. If you have questions about your company's internship policy, it may be best to consult an employment attorney to be sure that you are operating within the law.

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Related Resources:

• 5 Lessons From NBC's Unpaid Intern Settlement (FindLaw's Free Enterprise)
• Unpaid Interns Strike Back: Gawker, NBC Sued (FindLaw's Free Enterprise)
• Got Unpaid Interns? 5 Do's and Don'ts for Employers (FindLaw's Free Enterprise)
• Unpaid Intern Lawsuit? Try Mediation (FindLaw's Free Enterprise)