Are Unpaid Internships Acceptable in Fashion?

Forget fringe. Accepting an unpaid internship and then suing after its completion for unpaid wages and overtime compensation is the newest movement in fashion and, as it turns out, Ashley Olsen and Mary-Kate Olsen’s award-winning brand, The Row, is right on trend. The 29-year-old twins, who took home their second Council of Fashion Designers of America Award this year, are the most recent designers to be sued in connection with an unpaid internship.

According to plaintiff Shahista Lalani’s complaint, which was filed this month in New York state court, she worked for The Row for four months in 2012. Lalani claims that as the “head intern” she performed the same work as “some full-time employees,” such as photocopying, sewing, cleaning, and running personal errands, including carrying “like 50 pounds worth of trench coats” in 100-degree weather, without receiving compensation or college credit.

Speaking of her experience to Page Six, Lalani said: “You’re like an employee, except you’re not getting paid. They’re kind of mean to you.” She alleges that the Olsen’s holding company Dualstar has a history of misclassifying entry-level employees as minimum wage-exempt interns in violation of New York Labor Law – a key claim in all of the recent unpaid internship lawsuits, including ones against Gucci, Zac Posen, Ralph Lauren, Coach, Lacoste, Tommy Hilfiger, Fendi, Calvin Klein, Burberry, Marc Jacobs, Oscar de la Renta, and Donna Karan.

This recent bout of unpaid internship actions comes on the heels of two major lawsuits: one filed by a former Harper’s Bazaar intern and another filed by two former Condé Nast interns. Diana Wang, who interned at Harper’s Bazaar, brought a class action lawsuit against the magazine’s parent company, Hearst Corporation in 2012 — marking one of the first major intern lawsuits to cast a shadow over the fashion industry. Wang called her experience at the magazine “outrageous” and “very belittling.”

She claims to have worked five days a week 9 a.m. to 8 p.m., with tasks that included tracking the thousands of purses, shoes, and pieces of jewellery lent to the magazine for photo shoots, managing as many as eight other interns and sending them on 30 to 40 errands a day, and answering the accessories director’s phone.

As a proposed class action lawsuit (one in which a group of named and unnamed plaintiffs joins to sue a defendant or group of defendants), Wang’s lawyers aimed to have the lawsuit be open to others who had interned from as early as 2006 at any of the 19 magazines under Hearst’s umbrella. That case, along with a similar suit filed against Fox Searchlight in connection with its film Black Swan, has made the rounds through the New York federal courts. In July, the Second Circuit Court of Appeals ruled in both Hearst’s and Fox Searchlight’s favour, fashioning a new, employer-friendly test for identifying whether an individual is an intern or an employee, and thus, whether he or she is entitled to minimum wage.

In these two much-anticipated decisions, the court held that an intern will not be classified as an employee, and will not be entitled to minimum wage, if he or she is the primary beneficiary of the internship. This standard and the test that comes along with it are quite different from the former test, under which the Department of Labor held that if the employer receives almost any benefit from the interns’ work, the interns are to be classified as employees and entitled to minimum wage.

The new standard is far less stringent, and as a result, tends to favour the employers by focusing on the intangible benefits of an internship, such as networking, experience, making contacts, adding the company to your resume, and ignoring the benefits of internships to employers. As such, these two decisions are momentous wins for employers in New York.

In June 2013, Wang’s case against Hearst was followed by another proposed class action lawsuit filed by Lauren Ballinger and Matthew Leib — unpaid interns for W magazine and The New Yorker, respectively. Ballinger and Leib claimed that Advance Publications and Condé Nast (by way of its 25 subsidiary magazines) violated the Fair Labor Standards Act and New York State Labor Law by misclassifying them as interns (as opposed to entry-level employees) and failing to pay them. If knowingly accepting an unpaid internship, completing it, and then suing for unpaid wages seems peculiar to you, it is these laws that allow it.

The Fair Labor Standards Act and state equivalents allow “interns” to sue for back pay for an internship he or she agreed would be unpaid, as they require employers to pay minimum wages to those whom they “employ,” regardless of any agreement to the contrary.

Following in the footsteps of Elite Model Management, which agreed to pay $450,000 to more than 100 former interns to settle a lawsuit filed in 2013, Condé Nast settled its case out of court. The company agreed to pay the class of 7,500 former interns a total of $5.85 million but not before the publishing giant abruptly terminated its internship program, one of the most sought-after programs in the industry.

The move to stop accepting interns was met by widespread industry dismay. One especially strong response came from WWD's executive editor Bridget Foley, who wrote an article calling the recent internship lawsuits “ridiculous” and “disingenuous” and the result of “Millennial self-absorption and entitlement." As of this past May, Condé Nast is reportedly accepting editorial fellows for a six-month, paid program that hires participants on a full-time basis.

The unpaid internship is ubiquitous across America and beyond. While large-scale class action lawsuits mirroring the ones we are seeing in the U.S. are relatively rare in Europe, even when they are legally possible, it is worth noting that the rise of such lawsuits is not strictly limited to American courts. Its international fashion counterparts are also being hit, albeit with less frequency and in a far less public manner. However, that may be changing.

As the New York Times noted in 2013, organisations such as Intern Aware in the United Kingdom, Génération Précaire in France and La Repubblica Degli Stagisti in Italy are working with dissatisfied interns, offering legal information and resources, organising protests, and generating press coverage in the fight against unpaid internships.

In England, a few high profile cases have been filed in London courts in connection with fashion industry internships in the recent past. British luxury brand Alexander McQueen was served with an unpaid wages lawsuit by a former intern in February 2014. The plaintiff, Rachel Watson (which is not her real name but the one she is going by in the complaint) alleged in her complaint that she worked for four months without being compensated, with tasks that included drawing artwork for embroidery, repairing embellished clothing, and dyeing large quantities of fabric. Watson claimed that the unpaid internship was a violation of national labour laws.

Moreover, The New York Times reported in September 2013 that there had been a number of internship-related private settlements with high-profile companies, including upscale department store Harrods.

Both matters follow controversy that erupted in 2013 when Alexander McQueen, which is owned by French conglomerate Kering, posted a listing in search of a fairly long-term unpaid intern. One of Alexander McQueen’s studio managers sent an email to various fashion and design schools saying they were in “urgent” need of a “talented knitwear student” after their current intern had suddenly left. The internship, which was set to last from six to nine months, and consisted of nine and a half hour days, five days a week, was to be largely unpaid. The house apologised, stating that the ad was “issued in error and was not in accordance with our HR policy.”

Other European countries have adjusted their laws to accommodate internships. In France, the Loi Cherpion, which was enacted in 2011, strengthens the legal rights of interns, stipulating amongst other things that interns working for more than two months must receive the minimum wage. In Italy, a labour market reform passed in 2012 mandated pay for interns of at least €300 per month, and up to €600 in certain cities.

Now, more than ever before, there is no shortage of unpaid internship lawsuits being pursued in creative industries, where internships are often considered a right of passage and the industries are perceived as glamorous enough to get people to do menial tasks for little to no pay. Such suits are certainly helping to raise awareness, but as we saw in July, with the Second Circuit Court of Appeals’ rulings, lawsuits are not always a slam-dunk for interns.

In light of the Black Swan and Harper’s Bazaar cases, class action certification (a court’s approval of a lawsuit in which a group of plaintiffs sues together) is more difficult than before, meaning that class actions may no longer be appropriate vehicles for former interns. Moreover, because class actions appear to be less promising under these new holdings, plaintiffs will have to pursue their claims individually and not as part of larger lawsuits, which will probably be a disincentive for interns considering filing suit.

While the fight against unpaid internship positions only seems to be growing, change is slow. Some media companies, including Condé Nast and Gawker have replaced unpaid internships with paid fellowships. Other companies have begun offering minimum wage. This does not appear to be the overall trend, however, as there is also no shortage of internships available beginning this Autumn at big fashion houses, emerging designers’ studios, public relations companies and upscale department stores in New York, most of which include “assisting in the day-to-day workings of the office” and require either full time or part time hours, including “some after work hours and weekends” in exchange for “school credit or experience only.”

Given Mary-Kate and Ashley Olsen’s extremely private nature, the lawsuit they are facing will almost certainly be settled quietly out of court. But, the same cannot be said for a number of the other pending suits. We expect to see more from the Black Swan and Hearst lawsuits and, chances are, a number of new lawsuits against fashion brands as the landscape of what is acceptable in terms of internships continues to change.