Businesses are always on the lookout for ways to save a buck. Thriftiness can quickly yield to labor law violations when employers decide to take advantage of workers. One way this happens in certain industries is to designate someone an unpaid intern and then treat them as employees. This is a violation of minimum wage laws. The unpaid internship program run by NBCUniversal was recently the subject of lawsuits alleging labor law violations. NBCUniversal agreed to pay $6.4 million to settle the claims brought under the Fair Labor Standards Act. Other entertainment companies have so far resisted settling these claims and are hoping for a favorable ruling in higher court.
The FLSA takes a broad view of what it means to employ someone. Unpaid internships are a narrow exception allowing certain individuals to serve certain functions without pay. The key is that the work must serve the individual's interests, as opposed to the business where they are interning. There are several criteria that must be met to fall under the exempted category of unpaid intern.
Two of those criteria are often at issue in lawsuits alleging labor law violations. Employers with unpaid interns must derive no immediate advantage from the activities of the intern and interns must not displace regular employees, but must work under close supervision of existing staff. Basically, unpaid internships are for the education of the intern and are offered by employers out of the goodness of their hearts. You can see that the situation is ripe for abuse by employers.
Source: The Hollywood Reporter, "NBCUniversal Agrees to Pay Out $6.4 Million To Settle Unpaid Internship Claims (Exclusive)" by Eriq Gardner, 21 October 2014