Recently, there has been a spate of lawsuits filed by, or on behalf of, unpaid interns. The majority of these cases have attained class-action status and name prominent entertainment corporations as defendants, including: Fox Entertainment Group, NBC Universal, Warner Music Group and Universal Music Group among others.
These lawsuits are largely a product of a June 2013 decision by Judge William H. Pauley III of the Southern District of New York who ruled for two unpaid interns in their case against Fox Searchlight Pictures. In Glatt v. Fox Searchlight Pictures, Inc., Judge Pauley found that Fox Searchlight should have paid interns who worked on the movie “Black Swan” because they essentially carried out the same duties as regular (i.e., paid) employees. In arriving at his decision, Judge Pauley cited specific criteria that the Department of Labor has adopted as a test for whether an individual qualifies as an unpaid intern:
- the internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
- the internship experience is for the benefit of the intern;
- the intern does not displace regular employees, but works under close supervision of existing staff;
- the employer that provides the training derives no immediate advantage from the activities of the intern and on occasion its operations may actually be impeded;
- the intern is not necessarily entitled to a job at the conclusion of the internship; and
- the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
Since the interns did not receive training similar to that in an educational environment and because Fox Searchlight was the primary beneficiary of the internships, Judge Pauley maintained, the unpaid interns were employees entitled to the wage-hour protections of the Fair Labor Standards Act and the New York Labor Law.
Although the case has been appealed to the Second Circuit, the decision seems a natural outgrowth of mounting unrest and uncertainty in the entertainment and other industries regarding the long-established use of unpaid interns. Just last December, Charlie Rose and his production company agreed to pay up to $250,000 to settle claims brought against them by unpaid interns. Similarly, lawsuits have been filed against Hearst Magazine, designers Donna Karan and Norma Kamali, and Elite Model Management.
These, as well as other, actions have forced employers to re-evaluate their internship programs. Depending on the Glatt appeal, private companies may very well scrap their unpaid internship programs altogether. Which leads us to the following question: would this be such a bad thing?
On the one hand, many students or young adults would jump at the opportunity to work for free just to get a name like Fox or NBC on their resumes. On the other, should these individuals be spending their summers or semesters getting coffee and answering phones without being compensated for such “grunt” work? Many argue that unpaid internship programs undoubtedly favor individuals from wealthier backgrounds who can afford to work (grunt or otherwise) for free. Because internships can serve as valuable platforms from which to obtain permanent positions within an industry, those who sympathize with this sentiment assert that unpaid internship programs contribute to a self-serving cycle favoring higher-income individuals. However, some internships do provide young, eager individuals with valuable experience, skills and connections. And if employers are forced to pay their interns, these positions may simply vanish.
The inequality issues coupled with the largely futile experience of current interns, particularly in the entertainment industry, convey a serious problem. Although there are no clear answers, the Second Circuit can at least use Glatt as an opportunity to refine what is to be expected of interns and whether they are entitled to at least minimum wage. It will then be up to employers, many of who can easily afford to make such payments, to do the right thing.
Zachary Klinger is a J.D. candidate, ’15, at the NYU School of Law.