Unpaid Interns Get a Court Ruling in Their Favor
BY Erik Sherman
Thinking of not paying your underlings? A recent court ruling might make you want to think again.
In some industries, unpaid interns are part of the landscape. Young people either in school or recently out provide free labor in exchange for experience and a chance to make connections. Only sometimes the companies seem to be the real beneficiaries, possibly using interns rather than what otherwise would be low-level paid staff. A recent court decision may undermine the whole practice.
A New York court came down on the side of some interns in a class action suit, ruling that Fox Searchlight's intern program was illegal because it violated some basic labor laws. The same logic that won there could prove dangerous to any business looking to augment its workforce on the cheap.
In short, Alex Footman and Eric Glatt were unpaid interns at Fox Searchlight, part of Fox Entertainment Group, while the movie The Black Swan was being made. They brought suit, alleging that they were really employees whose responsibilities and conditions went beyond those of an intern.
New York federal judge William Pauley agreed with them under two multi-part tests. Here are all of the conditions of the two:
The company could hire and fire them
Fox Searchlight company controlled work schedules and conditions
The company determined the rate and method of payment, or lack thereof (and not, say, a school awarding credit to the students)
Employment records existed
The people used the company's premises and equipment for work
The production company where they spent their time did not have other clients
The work done by the interns was "integral" to the company's process of production
The crew of the production company was actually tied to Fox Searchlight
Sounds similar to the IRS rules on whether someone is a contractor or an employee, doesn't it?
"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"
The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship
This isn't the final word. Fox intends to appeal. Interns at Hearst Corporation lost a round in May when a judge threw out class action certification, but the individual cases aren't over. And this ruling may have handed them some additional ammo.
If you've considered using unpaid interns to help around the office, now may be the time to get a second opinion.