Fenwick Employment Brief - June 2013: Alert: “Unpaid Interns” Held to be Employees Who Should Have Been Paid

As this FEB went to publication, a federal district court in New York issued an important — and very instructive — decision on the compensation of unpaid interns at for-profit companies. In Glatt v. Fox Searchlight Pictures, the court found that plaintiffs, who worked as interns on the “Black Swan” movie, were actually employees entitled to minimum wage, among other protections.

While the defendants claimed the interns were “trainees” for purposes of the Fair Labor and Standards Act and were not entitled to wages, the court disagreed. It emphasized that the interns did work that, had they not been there, would have fallen on other workers (through increased hours or additional hiring). It further noted that the benefit the unpaid interns received — “such as knowledge of how a production or accounting office functions or reference 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.”

It is a common practice for people trying to get a “foot in the door” in the entertainment industry — which is notoriously difficult to do — to accept unpaid positions. But, as this decision shows, the practice (whether in the entertainment or any other industry) has come under significant scrutiny, and the decision has great relevance to all for-profit companies using unpaid interns. We will cover this decision in further detail in the July 2013 FEB. Until then, for-profit companies should be aware that treating workers as “unpaid interns” can be a risky proposition and should be done only after careful consideration and consultation with legal counsel.