In a significant test of how interns can be treated under industrial law, Crocmedia faced court action after the workplace watchdog found the company had grossly underpaid two workers tens of thousands of dollars.

The Federal Circuit Court on Thursday handed down fines of $24,000 against the Melbourne-based media company, which develops and sells radio, TV and online content.

A probe by the Fair Work Ombudsman revealed serious underpayments of two young people who approached Crocmedia seeking work experience in the industry.

For between six months to a year, the workers produced radio programs for the SEN network and routinely worked multiple weekly shifts, including the "graveyard" shifts from midnight to 6am.

Crocmedia classed the employees as "volunteers" and made reimbursement-for-expenses payments to them for each shift, but did not pay them any wages.

One of the producers was a 20-year-old sports journalism student when she started. The Ombudsman said she should have been paid nearly $6000 but was paid nothing. The other producer when he started was a 23-year-old recent graduate from a university journalism course, who was entitled to $16,400.

Fair Work inspectors told Crocmedia that because the pair had performed productive work for the company that was not a formal part of their university studies they were entitled to be paid minimum wages.

Crocmedia co-operated with the investigation and admitted breaching workplace laws. The company back-paid the two workers fully in 2013 and has now replaced all unpaid work positions with paid positions. It also agreed to back-pay more than $28,000 to a third worker who had been engaged as a "volunteer" radio producer.

The case is the latest example of what a recent report identified as a growing trend of employers improperly using internships and other forms of unpaid work experience. It said employees must be paid for work not linked with an educational or training program.

The Adelaide University report determined that the worst offenders in Australia were industries such as media, retail, hospitality and law.

Fair Work Ombudsman Natalie James said the watchdog launched legal proceedings against Crocmedia because of the strong public interest in deterring employers from underpaying young workers through unpaid work arrangements.

"When a worker moves beyond merely learning and observing and starts assisting with business outputs and productivity, workplace laws dictate that the worker must be paid minimum employee entitlements," Ms James said.

"We don't want to stifle genuine learning opportunities that help young people get a foot in the door but we also don't want to see young people being treated unfairly through unpaid work schemes ... we want to educate employers and workers about what genuine learning opportunities look like."

In his ruling, Judge Grant Riethmuller found that Crocmedia had engaged in an arrangement that it thought avoided the consequences of the minimum wages requirements.

"However, [Crocmedia] cannot avoid the proposition that it is, at best, dishonourable to profit from the work of volunteers and, at worst, exploitative," he 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."

Interns Australia, which lobbies for the fair treatment of interns, said the ruling was an important step in ensuring greater protections for young and vulnerable job-seekers.

"While internships can provide valuable hands-on experience for students and job-seekers, the lack of provision in employment laws for interns and very high youth unemployment means that we are seeing more and more cases of interns working for free in positions when they should be paid a wage," group co-founder Colleen Chen said.

Crocmedia has been approached for comment.