Viacom Agrees to Pay $7.2 Million to End Internship Lawsuit

The going rate to compensate interns for three months of unpaid work is $505.

Viacom will be putting up more than $7.2 million to end a lawsuit over unpaid internships. If approved by a New York federal judge, the settlement will represent the most amount of money ever set aside to resolve labor claims on the internship front.

The class-action lawsuit was filed by Casey Ojeda, who was an unpaid intern at MTV from September 2011 to January 2012. He was joined by more than 300 other individuals.

Read more NBCUniversal Agrees to Pay Out $6.4 Million To Settle Unpaid Internship Claims (Exclusive)

On New Year's Eve, attorneys informed the court that they had reached a deal, but given the complexity, it took another couple of months working with a magistrate judge to finalize terms and submit it for approval.

According to a memorandum in support filed on Wednesday, $900,000 of the total will be going to law offices of Virginia & Ambinder and Leeds Brown for handling the case.

The rest will be landing with former interns who worked at Viacom in New York from Aug. 13, 2007, through June 1, 2013, or worked in California from Sept. 11, 2010, through June 1, 2013, or elsewhere in the nation from Jan. 1, 2012, through June 1, 2013.

Read more Warner Music Group Settles Lawsuit Over Unpaid Interns

The $7.2 million that Viacom would be paying is more than the $6.4 million that NBCUniversal agreed to pay to end its own lawsuit, but that's more reflective of the amount of interns each company was using than anything else.

By now, as one company after another files settlements, an economic model to determine reasonable compensation becomes more clear. The average settlement payment in the NBCU case was $505. For Viacom, it's $505 for each traditional academic semester in which the participating claimant was an intern.

Read more Viacom Settles Intern Class Action Lawsuit (Exclusive)

Despite recent layoffs at Viacom, the company has done the math and figured out that the cost of ending the lawsuit beats the cost of litigating, the bad publicity and whatever other factors drove the settlement.

Viacom could have taken a shot at beating the case regardless. The 2nd U.S. Circuit Court of Appeals is due to deliver an opinion in the Black Swan case about how to determine who's really an "employer" under the Fair Labor Standards Act. In submitting the settlement, attorneys for Viacom and the suing plaintiffs cite the coming decision as a risk for plaintiffs if they proceeded.

In a statement, Viacom says, "We are pleased to conclude this litigation.  Viacom’s popular internship program has helped thousands of students launch careers in the entertainment business and beyond.  We are proud of our efforts — not only do we fully comply with all applicable educational requirements, but Viacom’s interns also take part in a unique, in-house educational program designed to broaden their experience and help them learn from senior executives across the company.”

Email: Eriq.Gardner@THR.com
Twitter: @eriqgardner

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