The Dark, Ugly Side of Using Unpaid Interns (under the FLSA)

photo: Charles Leeuwenburg

Unless they protect themselves, employers using unpaid interns risk running afoul of the Fair Labor Standards Act and state labor laws.

Indie movie spinoff Fox Searchlight (a division of Twentieth Century Fox) has been slapped with a lawsuit by two interns who worked on the set of the award-winning film, Black Swan.

In Eric Glatt and Alexander Footman v. Fox Searchlight Pictures, Inc., the plaintiffs say they functioned more like employees than interns, and should have been paid accordingly (at least minimum wage and overtime for anything over 40 hours in a workweek). They are hoping to have their class action suit, which is filed in U.S. District Court, Southern District of New York, certified on behalf of all “interns” (about 100) who worked on the set.

It’s important to not confuse training time for current employees with trainees or student trainees, which include summer interns or potential new hires, and who can be exempted from FLSA coverage entirely. The U.S. Department of Labor sets out six requirements for employers using unpaid interns. They are spelled out in a fact sheet, “Internship Programs Under The Fair Labor Standards Act,” and specify that:

• The internship is similar to training that 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 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.
• The employer and the intern understand that the intern is not entitled to wages for time spent in the internship.

See Wage and Hour Opinion Letter, Jan. 6, 1969.

The Black Swan plaintiffs say they regularly worked up to and in excess of 40 hours per week — doing anything from making coffee and delivering lunch to taking out trash, cleaning offices, collecting receipts, preparing expense reports and spreadsheets, and travelling to acquire authorization signatures or pick up employee time sheets and paychecks, according to the law firm Nixon Peabody. Some of the tasks were described as those similar to work performed by a janitor.

Given the uncertainties surrounding internship programs under DOL Secretary Hilda Solis, Tammy McCutcheon, former DOL Wage and Hour administrator and shareholder at Littler Mendelsohn, says: “The best advice I can give to employers is that offering unpaid internships through a program in partnership with an institution of higher learning presents very little legal risk … especially if the student is receiving academic credit.” She added: “However, if the intern is not part of a high school or college program, I recommend a more detailed analysis using the six-factor test.”