N.Y. Judge to Movie Studio: Pay Your Interns!

Why pay your interns when you can get them for free, right? Wrong.

A recent federal court decision in New York should make Minnesota employers nervous if they are not paying their college students this summer.  In Glatt v. Fox Searchlight Pictures Inc., (June 11, 2013), the judge ruled that unpaid interns who worked during the production of the movie  Black Swan were employees entitled to the protections of the Fair Labor Standards Act (“FLSA”).  Simply labeling such workers as “interns” does not relieve an employer from its obligation to pay them for doing the same work that employees do.

The FLSA requires, among other things, that all non-exempt employees be paid at least the federal minimum wage for each hour worked.  The U.S. Department of Labor (“DOL”) has recognized, however, that a true “trainee” or intern need not be paid because no actual employment relationship exists under the law.  The DOL’s 2010 guidance sets forth the following six criteria for when an internship may be unpaid:

  • the internship is similar to training that would be given in an educational environment;
  • the internship experience is for the intern’s benefit;
  • 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 intern’s activities;
  • the intern is not entitled to a job when the internship ends; and
  • the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

All six factors above must be met in order for the internship to be unpaid.

In the Black Swan case, it did not matter that the interns knew they would be unpaid because covered employees may not waive their rights or protections under the FLSA.  Since the interns performed the same type of routine tasks that paid employees performed, and since they did not get the type of training they would have received in an educational environment, they should have been treated like statutory employees.

The judge acknowledged that the interns did receive some benefits from their internships, including “resume listings, job references, and an understanding of how a production office works.”  However, these benefits “were incidental to working in the office like any other employee and were not the result of internships intentionally structured to benefit them.”  In reality, the employer benefitted from the interns’ work and therefore should not be excused from paying for it under the law.

Bottom Line

Although this ruling came from New York, there is ample reason to believe that Minnesota Courts will apply the DOL guidelines the same way.  Therefore, employers should examine whether their “interns” are doing the work that an employee would do and whether the company is benefitting from that work.  If so, that relationship should be reexamined.