Work for NO Pay??? Internships the New Entry Level Job

The Fair Labor Standards Act of 1938 (FLSA) was enacted during a period of high unemployment to ensure that employees would receive a “fair day’s pay for a fair day’s work.”  See Overnight Transp. Co. v. Missel, 316 U.S. 572, 578 (1942) (quoting “presidential message which initiated the legislation”).  Now, during another period of high unemployment the promise of the FLSA is being tarnished as more and more people are working for no pay; internships are considered by many to be the new entry level job.  In fact searching Google on the exact phrase “internship the new entry level job” produced close to 6,000 hits on August 22, 2012.  Most of these internships are unpaid as noted by the New York Times article, “Jobs Few, Grads Flock to Unpaid Internships.”

Despite the popularity of internships the FLSA does not exclude employees from its coverage simply because they are designated as “interns.”  In Walling v. Portland Terminal Co., 330 U.S. 148 (1947), the Supreme Court provided guidance on when trainees, including interns, do not have to be paid.  The Walling Court emphasized the FLSA’s broad definition of the employment relationship noting that “[t]his Act contains its own definitions, comprehensive enough to require its application to many persons and working relationships, which prior to this Act, were not deemed to fall within an employer-employee category.”  Id. at 150-51.  Even so the Court ruled that the act’s definitions of ‘employ’ and ‘employer’ “cannot be interpreted so as to make a person whose work serves only his own interest an employee of another person who gives him aid and instruction.”  Id. at 152.

Based on the Walling decision, the Wage and Hour Division of the U.S. Department of Labor has developed a six part test to determine when for-profit employers in the private sector can avoid paying interns.  The FLSA does not require that an intern be paid the minimum wage and overtime if the internship (1) “is similar to the training which would be given in an educational environment”; (2) “is for the benefit of the intern”; (3) “does not displace regular employees”; (4) does not provide an “immediate advantage” to the employer; (5) does not entitle the intern to employment at its conclusion; and (6) is based on an agreement that the intern will not be paid.  All six of these criteria must be met for the internship to validly be an unpaid one.  However employers, even large profitable employers, often ignore the legal requirements of the FLSA.

In September 2011, two former interns who had worked on the production of the highly successful film “Black Swan” sued a unit of the Fox Searchlight Pictures, Inc.  Although “Black Swan” produced huge profits, costing only $13 million to make and grossing over $300 million worldwide, the interns who worked on that film were not paid.  The plaintiffs, Eric Glatt and Alexander Footman, brought the suit on behalf of themselves and other interns who worked without pay on Fox Searchlight films.  They stated that instead of the internship being a learning experience, most of their time was spent performing productive work for Fox Searchlight, including filing paperwork, preparing coffee, and taking out the trash.

After examining the documents produced by Fox Searchlight in discovery the plaintiffs determined that the policies that resulted in Glatt and Footman’s lawsuit are common throughout the companies that make up the Fox Entertainment Group, Fox Searchlight’s parent company.  Fox Entertainment Group includes numerous companies besides Fox Searchlight, including Twentieth Century Fox and other film production companies as well as cable and broadcast television production, distribution, and network companies.  As a result the plaintiffs petitioned the court and on October 9 they received permission to amend their complaint to broaden the lawsuit to include all individuals in the internship program of the Fox Entertainment Group.   If you too have performed work for no pay, tell us your story.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.