Sirius said in court papers filed Monday in federal court in Manhattan that it still believed the unpaid intern program was legal, but that it would pay the money to more than 1,800 former interns to avoid costly litigation.
The plaintiffs, who worked on the Howard Stern Show and other Sirius projects, claimed they worked up to 40 hours per week and were not paid, in violation of the Fair Labor Standards Act and New York state's minimum wage law.
The primary test used by courts in such cases is whether internships were designed primarily to educate young people in a particular field, as opposed to companies using unpaid workers for the same tasks performed by regular employees.
The proposed settlement by Sirius, which must be approved by a judge, was announced a month after rulings by the 2nd U.S. Circuit Court of Appeals in New York. In cases against Fox Searchlight Pictures Inc and The Hearst Corp, the appeals court said unpaid internships were legal when they were closely tied to interns' education.
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