Unpaid internships are sometimes very helpful for young people to gain training and experience in a particular industry. In exchange for work, unpaid interns gain the opportunity to improve their resumes and be a more desirable job candidate in that field. Companies, however, may sometimes take advantage of free labor without providing educational benefits in return. This problem has become the focus of numerous lawsuits and has consistently made headlines over the past year.
Intern or Employee?
The Fair Labor Standards Act (FLSA) requires that anyone classified as an “employee” must be paid a minimum hourly wage and overtime. Unpaid interns do not fall under the “employee” label, and thus FLSA requirements do not apply to them. However, companies may not simply call someone an unpaid intern and expect to gain free labor. In fact, the United States Department of Labor (DOL) sets out six main criteria for defining unpaid interns:
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.
If these criteria are not met in an internship program, the company should be paying its interns.
Glatt v. Fox Searchlight Pictures, Inc.
The entertainment industry is particularly notorious for using unpaid interns to complete mundane tasks that would otherwise be completed by paid employees. Recently, this potentially unlawful trend has come to light in many lawsuits, led by Glatt v. Fox Searchlight Pictures, Inc., otherwise known as the “Black Swan” lawsuit. A group of unpaid interns for Fox who worked on the Academy Award-winning movie, Black Swan, claimed in the lawsuit that their tasks primarily consisted of running errands, fetching coffee, and other mundane tasks. The interns stated they received no specialized training or other educational benefits and, therefore, should have received minimum wage for their work under FLSA.
A lower court decided that the Black Swan interns did not meet the DOL criteria for unpaid internships and should have been classified as employees. The case is now under review by a Court of Appeals, and the decision could set the stage for many other unpaid intern lawsuits against companies such as Hearst Magazines, Major League Baseball, Atlantic Records, Conde Nast, and the Charlie Rose Show. In the meantime, companies should take a look at their internship programs to see if they meet the DOL criteria. If not, those interns deserved to be paid a minimum wage.
If you have any questions regarding unpaid internships or any other wage and hour concerns, do not hesitate to contact the Pershing Square Law Firm today for help.