JAMS ADR Blog by Chris Poole
The rise in unpaid internships has led to an equally significant uptick in litigation brought by interns demanding compensation for performing the same work as paid employees.
And the interns are winning.
Two interns who worked on Fox Searchlight’s film Black Swan, for example, brought a class action lawsuit claiming the company’s unpaid internship program violated federal minimum wage and overtime laws. A New York federal judge sided with the interns, ruling in June that they should have been paid as regular employees and also allowed the case to proceed as a class. Other intern lawsuits are now pending around the country against companies like Warner Music Group, Hearst Magazines, Conde Nast, Elite Model Management and more.
Because of the potential damage these types of lawsuits could do to a company’s reputation – as well as the reputations of interns just starting their careers who may not want to be known going forward as rabble-rousers – they lend themselves perfectly to mediation, particularly pre-filing litigation.
For a start, mediation is confidential. Sessions are held in private, behind closed doors.
No one besides the participants needs to even know that mediation is occurring. Further, all communications in mediation are statutorily privileged in most U.S. jurisdictions.
Unlike litigation, mediation is not a winner-take-all process where one side inevitably comes out worse off. Mediated settlements serve the parties’ long-term interests. Business relationships can be preserved, as well as future job prospects.
Finally, mediation allows individuals and companies to avoid devastating results. Class action litigation is unpredictable, and these disputes have the potential to come down heavily on one side or the other. Companies risk enormous financial losses. Interns risk never working again in their chosen field. Mediation reduces these risks significantly.
The legality of unpaid internships will ultimately not be settled without a legislative solution. In the meantime, interns and the companies that hire them would be wise to turn to mediation before going to court.
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