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Employment experts predict wave of lawsuits from unpaid interns

By Amanda Becker

NEW YORK (Reuters) - When two former interns at the New Yorker and W Magazine sued parent company Conde Nast Publications on Thursday, legal experts said it could be the first in a wave of lawsuits challenging companies who pay little or nothing for student labor.

The lawsuit comes just two days after a judge found that Fox Searchlight Pictures violated labor laws when it used unpaid interns for production tasks on "Black Swan," the 2010 film starring Natalie Portman.

Employment lawyers said that decision and similar lawsuits that are likely to follow would force employers to reconsider using unpaid or underpaid interns, first in "glamour" industries such as movies and publishing, where the practice has become standard, and then in industries that have implemented similar policies to reduce labor costs in a flagging economy.

"This trend is probably going to expand beyond media companies and beyond New York," said Laura O'Donnell, a lawyer at Haynes & Boone in San Antonio who represents management in labor disputes. "I think employers in all industries across the country need to take note."

Thursday's lawsuit was filed in U.S. District Court for the Southern District of New York, which also had issued the decision on Tuesday against News Corp's Fox Searchlight.

Lauren Ballinger, an intern at W Magazine for several months in 2009, and Matthew Leib, who had internships at the New Yorker in 2009 and 2010, said Conde Nast violated federal labor laws.

Ballinger received $12 a day to organize accessories, run personal errands for editors and make deliveries to vendors. Leib got a flat rate of $300 to $500 for each three- to four-month internship, which included reviewing submissions to the New Yorker's "Shouts and Murmurs" section, responding to emails sent to the magazine, proofreading and opening mail.

The lawsuit, which seeks a class action on behalf of all affected Conde Nast workers, said the Fair Labor Standards Act required the company to pay an hourly minimum wage.

Law firm Outten & Golden, which brought both the Conde Nast and the Fox Searchlight lawsuits, is identifying individuals who held unpaid internships during the past six years and is reviewing the conditions of their employment for possible wage-and-hour violations.

The firm is also handling a lawsuit against Hearst Corp by former Harper's Bazaar magazine intern Xuedan Wang. In that case, Judge Harold Baer, also in the Southern District of New York, said Wang, who had sought class-action certification, could not sue on behalf of other interns. The law firm is appealing the ruling, and Wang can still bring suit as an individual.

PBS talk show host Charlie Rose agreed to settle a similar class action brought by Outten & Golden late last year on behalf of 190 unpaid interns who worked on his eponymous program between March 2006 and October 2012.

BENEFIT TEST

"These young people are conscious of economic and class issues," Juno Turner, a lawyer at Outten & Golden, said of the Conde Nast lawsuit. "They see that people who are able to do these internships are people of means, whose families are able to support them while they work for little or no pay.

"They're standing up and saying: 'I've had enough of this.'"

A Conde Nast representative said the company did not comment on pending litigation.

The U.S. Labor Department has developed a six-pronged test based on a decades-old Supreme Court case related to railroad company trainees to determine whether interns at for-profit companies must be paid. It takes into account factors that include the educational value of the experience and whether interns displace regular workers.

"The real key to the test is that the internship has to be for the benefit of the intern as opposed to the employer," O'Donnell said.

Although unpaid internships are difficult to track, their prevalence is apparent in an annual survey of more than 30,000 students conducted by the National Association of Colleges and Employers (NACE). For the past three years, nearly half of all interns surveyed have reported working without pay.

The 2013 Student Survey found that while paid internships increased the likelihood of receiving a permanent job offer, unpaid interns fared only slightly better than students who did no internship at all. The median starting salary for a newly minted graduate with paid internship experience is $51,930, but only $35,721 for those who have completed an unpaid internship, the survey said.

That pattern was consistent across all academic majors, NACE researcher Edwin Koc said.

Ross Eisenbrey of the Economic Policy Institute, a nonpartisan think tank based in Washington, said would-be interns should think twice about agreeing to work without pay, even to get a foot in the door.

"You signal to employers that you aren't worth that much if you're willing to work for nothing," Eisenbrey said.

The case is: Lauren Ballinger and Matthew Leib v. Advance Magazine Publishers Inc, d/b/a Conde Nast Publications, U.S. District Court for the Southern District of New York, No. 13-4036.

(Reporting by Amanda Becker; Editing by Eddie Evans, Lisa Von Ahn and Prudence Crowther)

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