Crocmedia bitten by $24,000 fine for “exploitative” treatment of interns

Media identity Craig Hutchison receives some on-ground instruction from Sam Newman

Melbourne-based media company Crocmedia has been fined $24,000 over the “exploitative” treatment of two of its interns.

The Fair Work Ombudsman Launched legal action in July 2013 against the radio and television producer, alleging it had breached its obligations towards interns.

The Federal Circuit Court yesterday handed a $24,000 penalty to the company, which is owned by well-known journalist and businessman Craig Hutchison, for breaching the Fair Work Act.

Read more: How should you deal with interns?

Judge Grant Riethmuller found Crocmedia had not paid any wages to two young workers, aged 23 and 20 at the time, despite having engaged them in employment for one year and six months respectively.

Crocmedia had instead characterised the workers as ‘volunteers’ and had only reimbursed them each between $75 and $120 per shift for expenses.

The two began work with the company during a three-week unpaid work experience stint and were then hired for ‘casual work’ by the company.

The employees primarily worked on an ad hoc basis in the role of ‘producers’ for the “All Night Appetite” radio program, which was regularly broadcast on the SEN network from midnight to 6am.

In 2013, the Fair Work Ombudsman found the workers were owed a total of $22,168 for their work. At the time, Crocmedia complied with investigations by the watchdog and back-paid both employees, as well as a third worker who was owed more than $28,000.

While Judge Riethmuller said he did not believe Crocmedia had been openly defiant of the law, he said the company knew its actions breached minimum wage requirements.

“[Crocmedia] cannot avoid the proposition that it is, at best, dishonourable to profit from the work of volunteers, and at worst, exploitative,” Riethmuller said.

“I am not persuaded that [Crocmedia] engaged in a deliberate strategy to exploit the employees, although it is clear that [Crocmedia] was content to receive the benefits that flowed from the arrangement, and that the arrangement itself, when viewed objectively, was exploitative.”

Hutchison, chief executive of Crocmedia, said in a statement to SmartCompany Crocmedia has “been working cooperatively and positively with Fair Work Australia and accept[s] the penalty handed down”.

“We are pleased the matter has now come to a resolution,” Hutchinson added. 

Emma Starkey, senior associate employment lawyer at Maurice Blackburn, told SmartCompany the judgment was a significant decision regarding internships.

“In this case the court recognises that Crocmedia had contrition and had taken steps to rectify the underpayments, but it also suggests in the future fines we will see for employers who exploit interns are likely to increase,” says Starkey.

“It sends a strong message the courts are not going to permit exploitation of interns.”

Starkey says employers must take proactive steps to understand how the law pertains to unpaid work.

“Some of the key factors include, how long is the engagement? The longer it is, the more likely it is an employment relationship. In this decision it was around one year,” she says.

“Other factors include, what tasks are they given? In this case they were effectively the producers of the radio show. Also consider, who is getting the benefit. Is the intern getting the work experience benefit or is the company benefiting commercially?”

But Starkey says this case should not put off employers from taking on interns.

“Internships undertaken properly serve a good purpose,” she says.

“Employers shouldn’t necessarily turn away from engaging interns, but they need to do so properly and if they continue to employ them, they have to pay them.”