Court Rules That Employer's Unpaid Interns Are Actually Employees Covered By Wage And Hour Laws; Certifies Class Action Filed On Interns' Behalf


A federal District Court in New York recently ruled that production interns who worked on the set of the movie “Black Swan” are actually employees for minimum wage and overtime purposes, and certified a wage and hour class action brought on their behalf to recover unpaid wages.  In reaching its conclusion, the court relied on the federal Department of Labor’s (DOL) six-factor test for determining whether an individual qualifies as an intern.  Applying these factors, the court concluded the “interns” were actually employees because: (1) the interns did not receive any formal training or education during the internship; (2) the interns benefited from the experience in the same manner as employees and not as a result of a structured internship program; (3) the interns performed routine tasks such as filing and answering phones that would otherwise have been performed by regular employees; (4) the employer received an immediate advantage from the services provided by the interns; and (5) although the interns were informed they would not be paid at the outset and they were not promised employment after the internship period ended, the court found that those factors were not sufficient to overcome the other factors that favored a finding of an employment relationship.  Employers who use unpaid interns -- or paid interns who are not compensated in accordance with applicable wage and hour laws -- should remember that merely designating an individual as an “intern” is irrelevant in determining whether the individual qualifies as an employee for wage and hour law purposes.  Therefore, employers should carefully evaluate whether their use of interns complies with the DOL’s six-factor test on interns.  Employers who fail to do so may end up realizing that the “free” help they sought when they hired interns comes with an unexpectedly high price tag.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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