Business of Fashion

This lawsuit trend traveled from publishers to fashion brands

You may be familiar with the Undercover Boss show, but have you heard of undercover employees?

In my businesses counseling, I have found undercover employees exist in businesses of all ages. Likewise, both well-meaning and sheisty employers can end up with undercover employees.

Faceless business professional cartoon.Undercover employees is my term for “volunteers” or “unpaid interns” whose work ends up classifying them as employees. They are undercover in the sense that they A) pretend to be fine with unpaid status only to later push forth legal claims for backpay, or B) are actually fine with unpaid status until they realize they won’t get a compensated position, so they sue for payment. My upcoming post will discuss the difference in legal understanding of unpaid interns and employees.

During law school I found a legal internship at Chanel, which required that applicants receive credit for the internships. Reflecting the US Department of Labor’s Fair Labor Standards Act, my school did not allow credits for private sector positions “in order to protect students from being used for free labor.”

Since then, NBCUniversal, Warner Music Group, and Hearst have all been sued over unpaid intern claims. This lawsuit trend has traveled from publishers to fashion houses. Legitimate unpaid internships already exist but companies will surely become more conservative in their internship practices.

Do you think unpaid interns displace employees?

The latest fashion houses sued by former interns are Donna Karan International, Calvin Klein, Marc Jacobs International, and Oscar de la Renta. All these lawsuits share the same legal counsel and legal claim: the company in question avoided paying workers by misclassifying employees as interns, thus violating New York state law.

Surely these claims may have merit, but just as well they may be a reflection of disgruntled interns and modern day ambulance chasers who all want to try their hands at fast cash. On Thursday, Condé Nast agreed to pay $5.8 million to settle a class-action lawsuit brought by thousands of former interns at the publisher who said they were underpaid for work at the company’s high-end magazines. Former interns (dating as far back as 2007) will each get between $700 and $1,900. Unfortunately, when this suit was filed in June 2013, Condé Nast canceled its internship program.

When I volunteered at a law clinic I met immigrants whose status was used against them to deny them pay after they were hired for work. Even when compensated, some of these people were scheduled to work too many hours without rest or food breaks and not paid overtime pay previously agreed to. I am happy applying protections to these laborers. But without further information, I cannot justify the backpay of interns who knowingly took on unpaid positions. The knowledge exposure, networking, and benefit to resume would be value enough. There is the argument that people in need of paid work may be disadvantaged but receiving school credit may free up funds that would’ve otherwise gone to the school towards those credits.

The lawyers looking to score on these cases may have legal standing but could possibly be on shaky ethical grounds. According to former “Late Show” intern who sued Letterman over unpaid wages, these lawyers are a “beguiling legion of lawsuit-hungry attorneys.” Pagesix.com reported this intern issued a public apology for her unpaid intern claims, saying she was coerced by stupid lawyer tricks. The fact that she was approached off of LinkedIn shows the lawyers had been cruising for unsolicited business.

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