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Major Companies Can Expect Millions in Damages for Unpaid Interns

The headquarters of Warner Music Group, located in Burbank, California.

Former interns who were unlawfully denied minimum wages by Warner Music Group Corp. have received $4.2 million to resolve a dispute in New York federal court. Named plaintiffs, Kyle Grant and Justin Henry, filed a motion for preliminary approval of a settlement deal to resolve both federal and state wage claims. The plaintiffs got the class action status green light from the judge to reach out to more than 3,000 individuals with potential labor claims. The settlement negotiations have been ongoing for nine months.

Terms of the settlement allow each intern – a class of 4,500 – to be paid $750 for each academic semester served as an intern. Kyle Grant will receive an enhancement of $10,000, and the intern class counsel will likely receive up to 19% of the settlement in legal fees, $787,500. The tentative deal follows recent court-approved settlements of proposed class actions brought by former interns against NBCUniversal, Inc. and Viacom, Inc.
[sws_pullquote_right]See Also: Second Circuit to Hear Unpaid Interns’ Wage and Hour Class Action [/sws_pullquote_right]

Working Without Pay

Grant filed the lawsuit under the Fair Labor Standards Act, as well as New York labor law, alleging he and the other interns were misclassified as exempt from minimum wage requirements. The complaint accused WMG of operating a centralized, nationwide internship program in which they had to work at least 15 hours per week. The interns claimed their internship descriptions were identical regardless of the department or location.

Grant, for example, worked 50 hours per week in the WMG subsidiary Warner Bros. Records' radio promotions department but did not receive compensation or school credit. In addition to the lack of academic credit, the interns also claimed they received little to no supervision while working at the company.

The motion said, “By reaching a favorable settlement prior to dispositive motions or trial, plaintiffs seek to avoid significant expense and delay, and instead ensure recovery for the class. A trial would be lengthy and complex and would consume tremendous time and resources for the parties and the court.

Pleased to Settle

Warner Music Group said in a statement that it is pleased to settle the matter. "We continue to stand by our internship program as an invaluable educational experience for students looking to obtain hands-on, real-world training," WMG said. The settlement is still pending court approval, but it would cover former WMG interns in New York who worked for little to no pay dating back to June 2007.

The increasing number of intern lawsuits is a response in part to the June 2013, decision in which U.S. District Judge William Pauley, of Manhattan, said Twenty-First Century Fox, Inc. should have paid two interns who worked on the 2010 movie "Black Swan," starring Natalie Portman. Not paying interns has since proven to be a costly decision, resulting in the following range of damages:

  • NBCUniversal: $6.4 million.
  • Conde Nast: $5.85 million.
  • Viacom, Inc.: $7.21 million.
  • ICM: $725,000.

The Warner settlement makes Warner Music Group the largest company in the music industry to resolve litigation over past internship problems. In January, Camille Demere filed a proposed class action against CBS Corporation and CBS Radio. The same day, Allyson Kocivar brought a lawsuit on behalf of herself and others similarly situated against Wenner Media, a parent company of Us Weekly and Rolling Stone magazines.

New lawsuits over internships will continue to arrive on court dockets throughout the country as these high-profile cases consistently settle.

The case is Grant v. Warner Music Group, Corp., U.S. District Court, Southern District of New York, Case No. 13-04449.

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