Wider implications are expected, following the recent ruling by a U.S. District judge in New York holding that production company Fox Searchlight Pictures had broken overtime and minimum wage laws by failing to pay interns who toiled on the production of the 2010 blockbuster hit, “Black Swan.”
We anticipate from here seeing a wave of wage and hour litigation in New York, particularly as it relates to interns who are paid very little or nothing for their work.
The Economic Policy Institute estimates there are approximately 1 million unpaid internships offered annually in the U.S. each year, with most carried out during the summer, when there is a break between regular semesters. For a lot of students facing a competitive job market upon graduation, unpaid internships have become all but essential for gaining practical experience and enhancing their resumes.
Unpaid internships account for about half of the total number of internships.
Problems arise, however, when companies fail to correctly draw the line in the sand regarding what constitutes a beneficial situation for the student and conversely what constitutes free labor. The general rule is that the arrangement should be skewed in favor of the intern, though there are other requirements as well.
In the recent federal district court ruling, the judge held that the movie production firm should have paid the plaintiff interns because:
- They performed low-level work that required no specialized training;
- They did the same work as regular employees;
- They provided value to the company.
Some of that work included organizing file cabinets, making copies, running errands, drafting copy leaders and tracking purchase orders. None of this would be greatly beneficial in a future job in film, and instead basically amounted to free labor for the firm.
Just two days after that decision, two former interns at the New Yorker and W Magazine filed lawsuits alleging the firm violated federal labor laws by paying interns $12 daily to run errands for editors and run deliveries to various vendors. Each received a flat rate of $300 to $500 for their three months of service.
Then there was the recent case of PBS talk show host Charlie Rose, who settled a class action suit involving 190 former unpaid interns who worked on his show from 2006 through 2012.
Another class action lawsuit is pending against Harper’s Bazaar magazine in the Southern District of New York, brought by several former interns who say they did the same work as full-time employees, except received no pay.
Companies who offer or are thinking about offering unpaid internships should first consult with an experienced labor and employment attorney. We can help you determine whether the policy you have in place is in line with federal labor law standards.
Generally speaking, if your firm offers opportunities to unpaid interns – even just one or two at a time – you must make sure that:
- The internship is similar to training the individual would receive in an educational environment;
- The arrangement is for the benefit of the intern;
- The intern is not there to displace regular employees;
- The employer isn’t deriving any immediate advantage from the work of the intern, and in fact, operations may be slightly impeded;
- The intern knows he or she isn’t automatically entitled to a job when the internship is done;
- Both parties understand that the arrangement is unpaid.
The Law Offices of Ira S. Newman provides employment litigation representation in New York City, Long Island, Great Neck and throughout the area. Call 516-487-7375 or send us an e-mail.
New York lawsuit challenges legality of unpaid internships, June 13, 2013, Staff Report, The Clarion-Ledger
Employment experts predict wave of lawsuits from unpaid interns, June 14, 2013, By Amanda Becker, Reuters
More Blog Entries:
NYC Class Action Employment Lawsuit Pits Interns Against Hearst, Dec. 21, 2013, New York City Employment Lawyer Blog