Court Mulls Viacom’s $7.2 Million Settlement with Interns

A group of people in the states of New York and California claimed that media giant Viacom violated state minimum wage laws. Under state law and the Fair Labor Standards Act (FLSA), this group and nationwide participants in Viacom’s intern program brought a class and collective action in O’Jeda v. Viacom Inc., (S.D.N.Y. 2015) claiming they were “victims of a common policy to replace paid workers with unpaid interns,” or received less than the applicable minimum wage. The parties attempted to settle the case for almost nine months. On March 11, Viacom and the interns submitted a proposed settlement agreement to the U.S. District Court of the Southern District of New York for its review and preliminary approval. Viacom admitted no liability or bad acts, but agreed to pay $7,212,500 to settle the interns’ wage claims. This amount includes all payments to qualifying interns, employer payroll taxes and service award amounts, plus professional fees and costs totaling $900,000. Each qualifying intern may receive $505 per semester for up to two semesters of participation in Viacom’s intern program.

This case reminds employers with unpaid interns to carefully review the criteria for interns before allowing them to work. Keep in mind that the FLSA assumes a worker is a nonexempt employee unless the company proves otherwise. The U.S. Department of Labor has an intern fact sheet, which includes the test for unpaid interns.  Viacom’s proposed settlement is just another high-profile class-action lawsuit involving interns in a recent string of cases focusing on this topic. Contact MSEC with your questions.