On June 11, 2013 a federal district judge in New York ruled that two unpaid interns (one of which was a student at Case Western Reserve University) who worked during the production of Fox Searchlight Pictures, Inc.’s Black Swan were entitled to the wage-hour protection of the Federal Fair Labor Standards Act (FLSA).
In reaching its decision, the court considered six factors set forth by the U.S. Department of Labor. The Department of Labor has indicated that an employment relationship does not exist (and thus the FLSA does not apply) when:
1. 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;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. 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;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
The court concluded that at least one of the interns received no educational training and that neither intern benefited from the experience other than those benefits that are “incidental to working in the office like any other employee and were not the result of internships intentionally structured to benefit [the interns].” The court noted that “[r]esume listings and job references result from any work relationship, paid or unpaid, and are not the academic or vocational training benefits envisioned by [DOL factor No. 2].”
The court further concluded that the work performed by the interns (such as drafting letters, organizing filing cabinets, making photocopies, running errands, arranging travel plans, taking out trash, taking lunch orders, answering phones, and watermarking scripts) was work that, had the interns not performed it for free, would have required a paid employee. There was no question or dispute that the employer derived an immediate advantage from the activities of the interns.
Finally, the court determined that the interns were not entitled to a job at the conclusion of their internships and that they understood they would not be paid. However, the court noted that this last factor has little weight because an individual’s rights under the FLSA cannot be waived.
This decision has garnered significant media attention that is likely to precipitate a significant rise in claims of this kind. Employers should proceed with extreme caution and carefully evaluate the criteria listed above when considering whether to hire an unpaid intern.