Companies may face legal scrutiny when it comes to unpaid internships

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With companies gearing up to start their search for summer interns, they may want to think twice about making it an unpaid internship versus a paid one.

What has happened in the past?

Over the past few years, unpaid internship practices have experienced more legal scrutiny in terms of wages and hour lawsuits. Some of the most recognizable corporations have experiences lawsuits last year, including Warner Music group, Atlantic Recordings, Fox Entertainment group, NBC Universal, Viacom, Sony, and Universal Music Group.

One of the more high-profile cases was with Fox Searchlight. The U.S. District Court determined that some of Fox Searchlight’s unpaid internships were illegal, and that interns who worked on the organization’s production film sets were entitled to compensation under the Fair labor Standards Act (FLSA).

What is happening today?

Even though the ruling did not suggest that all unpaid internships are unlawful, it clearly set a precedent to employers who don’t pay its interns and how they could face costly consequences if they don’t meet criteria set by the Department of Labor.

It’s unclear how these lawsuits will affect internships in 2014. Some experts suggest that it may result in reducing job opportunities in some industries that have historically used unpaid internships, such as media and publishing industries. However, most employers understand the competitive benefits of providing compensation for interns.