Tuesday, 02 July 2013 15:20
By Robert Crump
One area of employment law that is becoming more and more contentious is that of the unpaid intern. Traditionally, organizations have been able to take on interns without pay by offering them necessary experience or the promise of connections in their chosen field. However, this practice has come under recent scrutiny from some claiming that unpaid internships amount to free labor in violation of the Fair Labor Standards Act (FLSA). A federal district court in New York held this month that a major movie studio violated the FLSA by failing to pay two production interns. Clearly, the mood regarding payment in the form of valuable experience is shifting.
A New York court flips the script
Just a month after one judge dismissed a class-action suit filed by a group of New York media interns, a New York district court held that two interns who worked on the Oscar winning film, Black Swan, were improperly denied pay. The judge decided that the two interns were classified improperly as unpaid interns and were more properly “employees” covered by the FLSA. They worked as paid employees work, providing an immediate advantage to their employer and performed low-level tasks not requiring special training, such as the construction and deconstruction of sets. The non-monetary benefits they may have received, such as knowledge of how a production or accounting office functions or references for future jobs, were simply the result of having worked as other employees work. Nonetheless, the production company attempted to classify the workers within the “trainee” exception of the FLSA, which requires any program to provide training similar to an educational environment and designed for the sole benefit of the interns or trainees. However, in this case the court found that any non-monetary benefits were not derived from any internship designed as uniquely educational to the employees and of little utility to the employer. For these reasons, the court ruled that the production interns did not fall within the narrow trainee exception of the FLSA’s broad coverage.
This ruling is monumental and precedent setting. The court decided that the two young men “worked as paid interns” and that the movie studio should have to pay them as such. This is the first time that a judge has held that interns, as they are commonly known today, are employees that are entitled to wages and protections just like normal employees.
Programs must provide real value to the interns
This ruling sets a new precedent that lays out the criteria that employers must meet to utilize workers without pay, under the FLSA. The new criteria sets a high bar for employers to meet. Now, in order to use an unpaid intern, the employer must establish that the program benefits the worker more than the employer, there is a formal training program, and the unpaid interns do not displace any regularly salaried employees. Indeed, the ruling does set a much higher standard for employers, making it much more difficult to retain part time, unpaid interns without first having a strict program in place.
The ruling is encouraging for any unpaid interns and perhaps troubling for employers. On top of the much more difficult standard employers much reach in order to retain unpaid interns, it is important to note is that interns do not necessarily have to come forward as a class in order to pursue claims against employers, but they can sue in an individual capacity. Any employers that currently operate unpaid internship programs need to be keenly aware of the requirements they must meet in order to continue running any program. In many cases, employers may need to completely revamp their programs to come into conformation with the newly defined rules.