United States: Class Action Lawsuits: In Vogue? High Fashion Gets Hit With Wage And Hour Class Action Lawsuits Over Unpaid Internship Programs

Sportswear-inspired designs, bold prints, and gingham aren't the only things trending for Spring 2015 in the fashion world. Judging from a recent wave of lawsuits, wage and hour class actions are trending as well. Over the past few years, class action lawsuits over unpaid internships have been on the rise, with this most recent wave of filed lawsuits serving as a powerful reminder to employers that intern programs can't simply be viewed as a way to recruit free labor.

Although the underlying factual allegations vary, the general premise of unpaid intern lawsuits are similar: under the Fair Labor Standards Act ("FLSA"), an employer must pay all "employees" the minimum wage, a broad definition the FLSA describes as anyone who "suffer[s] or [who is] permit[ted] to work." The only exception to this rule is if the worker works for his or her "own advantage on the premise of another," a clarification set forth in Walling v. Portland Terminal Co., 330 U.S. 148 (1947) and a definition relied upon in similar internship litigation. Of course, depending on the location of where the lawsuit is filed, different states' minimum wage and overtime laws may be implicated as well. For example, several of the lawsuits listed below allege violations of New York wage and hour laws.

"Working for one's own advantage" would likely constitute some sort of educational experience or opportunity to gain practical knowledge and skills in a chosen field; both are prime motivations of college students nationwide who sign up for internship programs to bolster their resumes and further their ultimate career goals. Problems arise, however, when unpaid interns perform work for the benefit of the employer, do not receive training, and aren't adequately compensated. 2015 has brought the following lawsuits so far:

  • Lacoste: Lacoste parent company Devanlay US Inc. was sued by former unpaid intern Allam Qayyem, who interned from September 2012 through December 2012. Qayyem alleges he performed the following tasks without pay: researching tax records, scanning and filing documents, preparing spreadsheets and running errands, for approximately 20-25 hours a week total. Qayyem further alleges he did not receive academic or vocational training.
  • House of Z: Zac Posen's House of Z was hit with a class action lawsuit by former intern Kevin Shahroozi. Shahroozi worked from March 2013 to July 2013 and was tasked with the following: sketching, cutting patterns, organizing fabrics, sewing, testing fabrics, researching in books and magazines, photocopying and running errands. Shahroozi worked about 21 hours a week. Shahroozi alleges he was not paid for his work, and that he did not receive any academic or vocational training.
  • Burberry: Lysandra Withlow, who interned at Burberry from May 2012 through August 2012, alleges she had the following jobs as an intern: washing dishes, rearranging chairs for client meetings, serving clients refreshments, organizing samples, taking inventory and other administrative tasks. Withlow alleges she worked 32 hours a week, was not paid, and did not receive any academic or vocational training.

The lawsuits filed against Lacoste, House of Z and Burberry join the ranks of several other fashion designers who were hit with class action lawsuits in Fall 2014:

  • Marc Jacobs: Linney Warren, a production intern from April to June 2009, alleged she worked 70 hour weeks and performed tasks such as transporting raw materials, organizing fabrics, sewing, and running errands.
  • Oscar de la Renta: Monica Ramirez, a former intern who worked from January to April 2009, alleged she was not paid properly for entry level work including: making jewelry, delivering fabric and accessories, and dressing models.
  • Calvin Klein: Rajwinder Kaur interned with Calvin Klein in 2009 and alleged she worked 30 hours a week performing work such as: data entry, fashion show production, research and maintenance of samples.
  • Gucci: Lindsey Huggins, who interned in 2008, alleged she was tasked with answering phones, assisting customers, maintaining excel sheets on store sales and assisting her manager for 40 hours a week.
  • Kenneth Cole: Former intern Oluseyl Shay Awogbile alleged he spent –up to 30 hours a week performing tasks such as assisting in design and sketching, maintaining the sample inventory, organizing production aspects, as well as running errands and performing administrative tasks.

Indeed, what might be even more frightening than the return of some 1970's fashion trends is the threat of a class action for employers. When an unpaid intern sues on behalf of themselves and others similarly situated, the employer isn't just facing liability for one individual's back pay and overtime compensation, but that of a group. To help offer employers guidance, the U.S. Department of Labor ("DOL") has laid out six criteria to help make the determination of whether an internship program is exempt from the FLSA. The criteria are: (1) the internship program is similar to training which would be given in an educational environment, (2) the internship experience is for the benefit of the intern, (3) the intern does not displace regular employees but works closely with existing staff, (4) the employer derives no immediate advantage from the activities of the intern, and occasionally may have its operations impeded, (5) the intern is not necessarily entitled to a job at the end of the internship and (6) the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship program.

The DOL states that if all of the factors are met, then an employment relationship does not exist under the FLSA and the FLSA's minimum wage and overtime requirements do not apply to the intern. Building an internship program with these six criteria in mind will assist an employer to properly classify its interns versus its employees, and help avoid wage and hour class action lawsuits. Properly classified workers and avoiding litigation: two things that will never go out of style.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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