Monday, June 17, 2013

Fox Searchlight case confirm that unpaid interns are a dying breed

Out of the millions of page-views this blog has received over the six-years of its existence, the most popular post (by an almost three-to-one margin over its closest competitor) is You should pay attention to this post if you have unpaid interns. In that post, I discussed a lawsuit filed by two unpaid interns who claimed that they should have been paid while working for Fox Searchlight pictures.

Last week, the United States District Court for the Southern District of New York agreed.

In Glatt v. Fox Searchlight [pdf], the Court applied the Department of Labor’s six-factor test and determined that that the internships should have been paid.

1. Is the training similar to what would be given in a vocational school or academic educational instruction?

While classroom training is not a prerequisite, internships must provide something beyond on-the-job training that employees receive…. Footman did not receive any formal training or education during his internship. He did not acquire any new skills aside from those specific to Black Swan’s back office, such as how it watermarked scripts or how the photocopier or coffee maker operated.

2. Is the training for the benefit of the trainees or students?

Undoubtedly, Glatt and Footman received some benefits from their internships, such as resume listings, job references, and an understanding of how a production office works. But those benefits were incidental to working in the office like any other employee and were not the result of internships intentionally structured to benefit them…. On the other hand, Searchlight received the benefits of their unpaid work, which otherwise would have required paid employees

3. Do the trainees or students work under their close observation of regular employees without displacing them?

Glatt and Footman performed routine tasks that would otherwise have been performed by regular employees…. His supervisor stated that “[i]f Mr. Glatt had not performed this work, another member of my staff would have been required to work longer hours to perform it, or we would have needed a paid production assistant or another intern to do it.”

4. Does the employer derive no immediate advantage from the activities of the trainees or students, and on occasion are the employer’s operations actually impeded?

Searchlight does not dispute that it obtained an immediate advantage from Glatt and Footman's work. They performed tasks that would have required paid employees. There is no evidence they ever impeded work at their internships. Menial as it was, their work was essential. The fact they were beginners is irrelevant

5. Are the trainees or students not necessarily entitled to a job at the conclusion of the training period?

There is no evidence Glatt or Footman were entitled to jobs at the end of their internships or thought they would be.

6. Do the employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training?

Glatt and Footman understood they would not be paid. But this factor adds little, because the FLSA does not allow employees to waive their entitlement to wages.

Based on the balancing of these six factors, the Court concluded the the employees “were classified improperly as unpaid interns and are ‘employees’ covered by the FLSA.”

This issue is not going away. According to Friday’s New York Times, last week two former interns sued Condé Nast for unpaid wages. I think it’s fair to say that the sun in quickly setting on the use of unpaid internships in corporate America.

In light of these cases, it bears repeating the conclusion I reached in The Employer Bill of Rights (p. 159):

Employers that use unpaid interns should pay careful attention to this issue. It is far better to scrutinize interns under the DOL’s six factors before the agency, or a group of plaintiffs, swoop in and do it for you. It is even better to formalize the relationship in a written internship agreement that formally spells out how each of these six questions is answered in your favor. Or maybe it is best simply to assume that except in rare cases, there is no such animal as an “unpaid intern,” and you should simply accept the fact that if you are going to label entry-level employees as interns, you need to pay them for their services.