U.S. District Judge Alison J. Nathan granted preliminary approval to a $450,000 settlement reached between Elite Model Management and former interns for alleged violations of New York and federal wage and hour laws. The plaintiffs alleged they were purposefully misclassified as “interns” when they were, in fact, performing the work of regular employees, except without pay. See Order Granting Plaintiffs’ Motion for Preliminary Approval of Class Action Settlement, Davenport v. Elite Model Management Corp., No. 13-01061 (S.D.N.Y. Jan. 9, 2014) (available here).
The lawsuit alleged that Elite Model Management used its internship program as a way to obtain free labor that it would otherwise have had to hire and pay workers to perform. The Fair Labor Standards Act permits unpaid internship programs, but only if the internship meets strict criteria for the interns to be classified as trainees. For such a program to pass muster, the employer must derive no immediate advantage from the activities of the intern, the intern must be the primary beneficiary of the internship, and the interns must not displace regular employees.
Former interns who opt into the Davenport settlement will receive approximately $175 for each week they interned at the modeling agency, with a minimum of $700 for four-week internships, and up to $1,750 each. The settlement is considered to be the largest unpaid internship settlement to date. It follows a slew of recent unpaid intern cases filed in New York state and federal courts which typically involve entertainment and media companies, such as Gawker, Charlie Rose, Condé Nast, and Fox Searchlight. The Davenport settlement is set for a final approval hearing on May 1, 2014.