Unpaid Intern Lawsuits

Unpaid internships suffered a setback this month when US District Court Judge William H. Pauley III ruled in Glatt v. Fox Searchlight Pictures that the defendant violated minimum wage and overtime laws when it failed to pay interns who worked on the movie Black Swan. The lead plaintiff is a Georgetown University law school student. The decision, the first to adopt this argument, rigorously applied the Department of Labor six-part test where internships in the for-profit private sector are viewed as employment relationships for which the federal minimum wage and overtime rules will apply, unless the intern is truly receiving training. The six criteria are:

(1) The internship is similar to training that would be given in an educational environment;
(2) The internship experience is for the benefit of the intern;
(3) The intern is not replacing employees and works under close supervision;
(4) The sponsor of the intern does not derive immediate benefit from intern's activities and at times, its operations may actually be impeded;
(5) The intern is not entitled to a job at the conclusion of the internship;
(6) The sponsor and the intern understand the intern is not entitled to wages for the time spent in the internship.

While not every factor weighed strongly in favor of finding the plaintiffs entitled to pay, Judge William H. Pauley III concluded that the plaintiffs “were classified improperly as unpaid interns and are ‘employees’ covered by the FLSA,” and that “[t]he benefits they may have received—such as knowledge of how a production or accounting office functions or references for future jobs—are the results of simply having worked as any other employee works, not of internships designed to be uniquely educational to the interns and of little utility to the employer.”

For more on the decision, see the Bloomberg BNA article Judge Rules Fox Searchlight Interns Are FLSA Employees, Certifies Class Action which concludes by noting that “In the past few years, unpaid interns of for-profit, private sector employers have brought several wage and hour suits in New York courts. The district court's ruling here is the first to find that such interns are employees under the FLSA.” The article cites to another case from the Southern District of New York, Wang v. The Hearst Corporation, where Judge Harold Baer ruled differently in denying partial summary judgment on the employee issue and finding various factual disputes concerning DOL's unpaid intern criteria.

Another class action, Bickerton v. Rose, which a former intern filed in New York Supreme Court last year, alleged that she regularly worked at least 25 hours per week without pay as an intern for The Charlie Rose show. The case ended when Rose and his production company agreed to pay up to $250,000 as a settlement without admitting any wrongdoing.