Though lawsuits from unpaid interns against their former employers are only starting to gain steam, Lorin Schneider and his partner, Yonatan Rubin, banked their legal careers on a potential flood of litigation earlier this year when they formed South Orange-based Schneider & Rubin LLC, which they said is the first law firm in the country to focus exclusively on interns' rights.
"My partner and I were discussing the issue of unpaid internships generally and how it relates to the idea of minimum wage last year, before the big lawsuits came out, and we're both still surprised it's really not a huge legal issue," Schneider said. "You can still do a quick search on Craigslist for internships in New Jersey, or go to any university in New Jersey, and you'll see a lot of those internships are not meeting federal or state guidelines. That's all potential litigation."
Kathie McLeod Caminiti, a partner at Fisher & Phillips LLP's office in the Murray Hill section of New Providence, said New Jersey has a more stringent test for employers to meet internship criteria than the federal Fair Labor Standards Act, which makes it more difficult for them to fully comply with wage and hour laws and win a case against an unpaid intern.
"The intern can't replace a regular employee from doing that work without being paid a wage, even if they're getting academic credit for it," Caminiti said. "There's more traction for these lawsuits now and, in a large measure, it's an outgrowth of the poor economy. Employers have tighter budgets and are increasingly doing more work with less people, so when they take on an unpaid intern, it looks more like they're replacing an employee."
Though many companies have formed partnerships with academic institutions to better meet unpaid internship standards and avoid litigation, Caminiti said the "easiest way for them to solve problem is to pay the minimum wage."
"If you lose the case, when you factor in back pay and overtime and damages, it comes down to you paying twice what the intern would have made on minimum wage," Caminiti said. "After attorney's fees, you could essentially be paying that intern $20 an hour without blinking an eye, when you would have only paid around $7 an hour in minimum wage while they were working for you."
If employers fail to record unpaid interns' hours, Schneider said they could face even higher costs in back pay and overtime after losing a case, since they have the burden of proof in court.
"Interns are entitled to recovery based on the number of hours they worked and overtime, and we've represented interns whose time at a company spanned from less than a month to a few years," Schneider said. "Even if someone interned for an employer for several years, a lot of employers don't log those hours. That means if an intern says, 'I worked 100 hours and here are some e-mails that support my claim,' the burden is on the employer to show records proving otherwise — and not a lot of companies have them."
While big unpaid internship lawsuits have not yet cropped up in New Jersey as they did in New York this summer, Caminiti said "we're seeing the beginnings of it here."
"I don't expect we'll see an avalanche of demand letters from interns to former employers, but I do perceive it to be an area of law that will gain more traction in the coming months," Caminiti said. "Most people only complain about pay after they leave a job, so we'll have to wait until the fall to see litigation resulting from the summer internship season."