Elite Model Management recently agreed to a $450,000 settlement with the company’s former unpaid interns—the largest settlement of an intern class action to date.

Approximately 150 former interns are eligible for payment between $700 and $1,750 in recompense for unpaid wages. The settlement resolves the claims brought forward by former Elite intern Daija Davenport who alleged the company intentionally misclassified employees as interns to avoid paying them wages.

“We certainly hope that this lawsuit encourages companies to abide by wage laws and pay the interns that work there,” said lead class counsel Steven Wittel of Wittels Law.

In February 2013, Davenport filed a complaint against Elite, seeking at least $50 million in unpaid wages, overtime pay, and attorneys’ fees on grounds of the Fair Labor Standards Act, which requires all interns to be paid unless the intern qualifies as a trainee. Under the U.S. Department of Labor’s six-factor test, an internship may only be unpaid if the internship experience is for the benefit of the intern and the employer that provides the training derives no immediate advantage from the activities of the intern.

“A simple way to think about it is, who is exploiting who?” said Daniel Bowling, senior lecturing fellow at the School of Law. “In my own business, if I were to offer a law student an internship in which he travels with me and I show him the ropes, that’s probably the intern that’s benefiting. If I have a matter that I’m too busy to attend to, and I get an unpaid intern to do it—that’s clearly exploitation.”

The guidelines also require that any internship in which interns are employed in place of regular employees, must be compensated. Many companies have increasingly relied on unpaid interns to do the work that would otherwise be delegated to paid employees. Upon being required by law to pay interns, some companies have cancelled their internship programs. Most notably, Condé Nast—a mass media company owning 20 media brands that include Vogue, GQ, The New Yorker, and Vanity Fair—canceled its internship program in 2013 in response to a lawsuit filed by two former interns.

Wittel criticized large, for-profit companies like Condé Nast for penny-pinching and refusing to pay interns despite having the financial capacity to do so.

“Say you work 35 hours a week at a minimum of $8,” Wittel said. “You work six weeks, that’s $1,680. Say a company hires 10 people. That’s $16,800. Do you really think $16,800 will break the bank of Vogue?”

He attributed the reaction of companies who have cancelled their internship programs to retaliatory tactics.

“This is a form of punishing interns for their legal rights,” Wittel said. “This is sending the message, ‘Hey, if you work for us, you work under our terms.’”

Jeffrey Hirsch, law professor at University of North Carolina at Chapel Hill who specializes in employment law, said that unpaid internships tended to discriminate against students of lower income backgrounds. While students from higher income backgrounds could afford to work in the summer for no pay, students from low income families were often financially unable to do the same, and were thus excluded from the same workplace opportunities.

“Chances are, these internships tend to segregate families based on their income,” Hirsch said. “You have people from wealthier incomes who can afford to do this, and some who actually need to be paid. So the class issue comes into the whole matter.”

The Duke Career Center helps make certain internships more accessible to low-income students by offering grants of up to $3,000 for undergraduate students who take unpaid or low-paying internships. In the past, students have used funding for costs related to transportation, housing, and day-today expenses, said Anne Lyford, associate director of employer relations at the Career Center.

“There are grants available, so I would say don’t shy away from unpaid or low-paying internships,” said Chris Heltne, director of communications for Student Affairs.

Despite extensive criticism leveled at unpaid internships, students have not hesitated to take low-paying and unpaid internships. Many have lamented the cancellation of internship programs due to lawsuits.

Lauren Alef, a sophomore who worked as an unpaid intern for Yves Saint-Laurent the previous summer, spoke of her internship experience positively. Despite working almost 60 hours per week, Alef said that the experience was worth working without wages.

“At the time, putting in the hours was really challenging, but now, looking back, I’m so grateful they let me do the work I did,” Alef said. “I kind of owe them for that.”