Avoiding the Black Swan: Part I

This is the first installment in a three part series on the history, the legality, and the uncertain future of unpaid internships in the arts and culture sector…

For arts groups across the nation, summertime is synonymous with intern season. We have grown so accustomed to the annual influx of young aspiring new workers offering high energy and limited skill sets at low and at times non-existent pay, they are almost akin to the changing of autumn leaves, or the hint of smoke on crisp winter air. However, this ubiquitous arrangement is being called into question by a series of lawsuits leveled against well known companies in the culture sector on both sides of the for-profit/not-for-profit divide, in a trend some are calling the beginning of the end of unpaid internships. Beginning on June 11, a federal district court judge in New York ruled that Fox Searchlight Pictures should have compensated two unpaid production interns for the work they had done for the 2010 film, Black Swan. This would mark the first victory of its kind for advocates against unpaid internships, and would open the gates for a number of new lawsuits levied by interns against their former employers:

• On June 13, a intern for W magazine and the New Yorker filed a lawsuit against publisher Conde Nast;
• On June 17, a former Atlantic Records intern filed a lawsuit against Warner Music Group;
• Eight former magazine interns have requested an appeal of their 2011 lawsuit against publisher Hearst, which was previously dismissed because the judge denied the suit’s class-action status.
• The Not-for-profit sector isn’t immune from this trend. On July 1, PBS talk show host Charlie Rose and his production company settled a lawsuit brought by former interns, paying out roughly $110,000.

The lasting impact of these lawsuits is yet to be seen, but as these cases make their way through the courts, corporations, both for-profit and not-for-profit, are sure to take a closer look at their internship programs and their compliance with labor law.

A Brief History

The modern practice of internships descends from the professional apprenticeship circa 11th and 12th century European trade guilds. Apprentices would train under master craftsmen and tradesmen, often performing manual labor and menial tasks until they would be promoted to a journeyman and begin earning meaningful wages. A key difference between apprenticeships of yesteryear and the modern internship is that the concrete benefits of apprenticeship were more clear, namely:

• training and instruction,
• admittance to a guild (or a union in the early 20th century) which would provide a reasonable assurance of future wages,
• and a standard for working conditions.

As trade guilds gave way to industrialization and the rise of formal professional education, apprenticeships were transposed into the business world in the form of the internships. These trainee-employer relationships would not be officially defined until a 1947 Supreme Court ruling, which offered the following guidelines for internships:

1. The training is similar to that which would be given in a vocational school;
2. the training is for the benefit of the intern;
3. The interns do not displace regular employees, but they do work under regular employees’ close supervision.
4. The employer providing training derives no immediate advantage from the activities of the trainees and, on occasion, the employer’s operation may actually be impeded;
5. Interns are not necessarily entitled to a job at the conclusion of the training period;
6. The employer and the interns understand that the interns are not entitled to wages for the time spent training

It would not be until the 1960s when formal internship programs, as we know them, would begin to appear in the business world. The importance of internships in hiring and recruitment increased as demand for skilled and knowledgeable workers rose with rapid technological development during the 1970s and 1980s. Nowadays, internships, particularly in the arts, have largely moved away from formal training programs to less structured learn-through-osmosis models. As internships have grown more commonplace many employers have begun to treat interns not as trainees, but as cheap or free labor.

An Ethical Question

There is little doubt that internships provide value to interns, in the form of competitive advantages over other job seekers, and to employers, in the form of a seamless training and recruitment tool. However in spite of existing labor laws, some employers exploit interns as a way to procure free labor by cycling through interns without any intent to hire them on a full-time basis. An increasing number of academic institutions and organizations do not support unpaid internships due to moral and ethical concerns.

Studies by the National Association of Colleges and Employers (NACE) and The Institute on Education and the Economy at Columbia University’s Teachers College found that paid internships were found to be generally superior to unpaid internships:

• Paid internships have a higher chance of leading to a paying job compared to unpaid ones.
• Unpaid internships tend to provide fewer skills compared to paid internships.

In spite of the fact that students benefit more from paid internships, the same studies found that in 2013, over 60% of internships at not-for-profit organizations were unpaid; in comparison, only about 40% of internships in the for-profit sector were unpaid. This article on Investopedia comments on the socioeconomic impact of unpaid internships:

“Unpaid internships contribute to recessions as well as are triggered by them. Tough economic conditions… make interns flock to unpaid internships in hopes of transitioning to a full-time paid job… An increased supply of free labor tends to displace full-time workers and increase unemployment… …Socioeconomic inequalities are exacerbated by unpaid internships… and it raises the question of equal access to opportunity. It seems that they tend to close off opportunities for minority applicants or people coming from disadvantaged backgrounds since high-quality and prestigious internships tend to favor the students/interns who come from affluent or relatively wealthy families and can afford to work for free… [I]t promotes greater inequality by having the top economic tier becoming less and less diverse… …Unpaid internships seem to… restrain economic mobility by making it increasingly difficult for people with a low economic status to accept an unpaid internship.”

Be sure to stay tuned for part II of this series, where we will explore the legal framework for internships for both for-profit and not-for-profit arts organizations.