The use of unpaid interns is a long-standing practice in many industries, particularly in the entertainment industry. That practice is under fire with the filing of a lawsuit by two interns who worked on the movie Black Swan. The two interns filed a class action lawsuit on behalf of all unpaid interns who worked for Fox Searchlight Pictures, a division of Twentieth Century Fox, alleging violation of the Fair Labor Standards Act (“FLSA”) and New York’s Labor Law. Eric Glatt and Alexander Footman v. Fox Searchlight Pictures, Inc., United States District Court, Southern District of New York, Case No. 11 Civ. 6784 (filed Sept. 28, 2011).
Fundamentally, a non-employee intern relationship can exist only where the organization provides training predominantly for the benefit of the intern. The United States Department of Labor will generally consider an individual to be a non-employee intern where:
- The training is similar to that which would be given in a vocational school;
- The training is for the benefit of the intern;
- The intern does not displace a regular employee;
- The intern works under direct, constant observation of regular employees;
- The employer derives no immediate advantage from the activities of the intern, and on occasion, the employer’s operations actually may be impeded;
- The intern is not entitled to a job at the completion of the training period; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in training.
DOL Wage & Hour Division Fact Sheet No. 71 (April 21, 2010); DOL Training and Employment Guidance Letter No. 12-09 (Jan. 29, 2010)
One of the named Black Swan plaintiff interns—who was a graduate of Wesleyan with a major in film studies—alleged that he prepared coffee, took and distributed lunch orders, took out the trash, cleaned the office, collected receipts, and prepared expense reports and ran miscellaneous errands. Another of the plaintiff interns—who had an MBA from Case Western Reserve University—alleged that he worked 40 to 50 hours per week performing administrative accounting department duties, including preparing documents and spreadsheets to track and reconcile purchase orders, invoices and petty cash, traveling to the set to obtain signatures to authorize payments, and traveling to the payroll vendor to deliver employee timesheets and pick up employee paychecks.
If an organization fails to properly classify an intern, serious legal and financial consequences may follow. If an intern is found to be an “employee,” the individual can arguably claim unpaid wages, including overtime and associated penalties. The FLSA and many state wage and hour laws also provide for the recovery of attorneys’ fees and costs, making misclassification cases expensive for employers. The organization can also become liable for damages for benefits not provided, workers’ compensation premiums, and has potential liability for workplace injuries.
Although this lawsuit is directed at the practice of using unpaid interns in the film industry, it emphasizes for employers in all industries the importance of carefully evaluating the use of unpaid interns.