In Davenport v. Elite Model Management Corp., No. 1:13-cv-01061-AJN (S.D.N.Y. Jan. 9, 2014) (Davenport v Elite-1) (Davenport v Elite-2), the court granted preliminary approval to a $450,000 settlement between Elite Model Management (“Elite”) and a group of unpaid interns who claimed the company intentionally misclassified employees as interns to avoid paying them wages and overtime.

Dajia Davenport, who worked for Elite as an intern during Fashion Week in 2010, filed the complaint in February 2013 claiming that Elite hired her and other interns like her to perform work that primarily benefitted Elite, such as chaperoning models at print and media shoots and preparing modeling books of the agency’s clients.  If granted final approval, Elite would pay more than 100 former interns between $700 and $1,750 each.  However, in the original complaint Davenport sought more than $50 million in damages.

The U.S. Department of Labor has weighed in on the controversy surrounding unpaid internships.  The Department advises that “internships in the ‘for-profit’ private sector will most often be viewed as employment,” however, there is an exception when the intern “serves only his or her own interest” or the intern is receiving training for their “own educational benefit.” When determining whether an unpaid internship program or training program meets the exception six factors are considered:

1)      Whether the internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2)      Whether the internship experience is for the benefit of the intern;

3)      Whether the intern displaces regular employees and works under close supervision of existing staff;

4)      Whether the employer that provides the training derives immediate advantage from the activities of the intern;

5)      Whether the intern is entitled to a job at the conclusion of the internship; and

6)      Whether the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If the above exception applies, then the employer may be excused from paying wages and overtime under the Act. For additional guidance consult the Department of Labor’s fact sheet here (Fact Sheet #71).

Guest Contributor: Sean Becker