Recent lawsuits filed by unpaid interns in New York demanding benefits may signal the end of the unpaid internship in corporate America. A federal judge in New York ruled this year that two interns are considered to be employees. See Glatt v. Fox Searchlight Pictures Inc., 11-cv-0684 (S.D.N.Y. 2013) The two interns sued Fox Searchlight and its parent company, Fox Entertainment Group, under the Fair Labor Standards Act (“FLSA”) and New York Labor Law.
The two interns worked on the production of the movie “Black Swan” without pay or academic credit. Analyzing guidance under the FLSA as to the hiring of unpaid interns, the Court found that these interns did work that otherwise would have been done by paid employees and that the companies were the primary beneficiaries of the relationship. The Court noted that Mr. Glatt’s supervisor stated that “[i]f Mr. Glatt had not performed this work, another member of my staff would have been required to work longer hours to perform it, or we would have needed a paid production assistant or another intern to do it.” Memo. And Op. at p. 24. Although, unpaid interns know that they are not going to be paid, the Court found that the FLSA does not allow employees to waive their right to be paid wages.
Another lawsuit filed this year as a class action suit seeks $5 million against NBCUniversal for work of unpaid interns on Saturday Night Live. Other similar suits filed by interns for publications and a record company also demand minimum wage benefits and overtime pay. See Ballinger v. Advance Magazine Publishers, Inc., 12-cv-4036 (S.D.N.Y. 2013); Henry v. Warner Music Group Corp. and Atlantic Recording Corp., (N.Y. 2013).
Wages are not the only benefit denied unpaid interns – protection from discrimination and sexual harassment are others. But another federal Judge in New York dismissed a claim by an unpaid intern against a former supervisor claiming sexual harassment because unpaid interns are not covered under Title VII of the 1964 Civil Rights Act and New York law does not protect unpaid interns. Wang v. Phoenix Satellite Television US, Inc., 13-cv-218 (S.D.N.Y. 2013).
So, where does the line get crossed when it comes to paying interns? It is not illegal to hire unpaid interns. Private sector companies can do so if they follow the guidelines under FLSA. Public sector or non-profit organizations do not have to follow these strict guidelines. As noted by the Court in Glatt, the guidelines state that interns cannot “displace regular employees” and that the employer must not derive “immediate advantage from the activities of the intern.” In essence, an unpaid internship is meant to be an opportunity for a person to shadow an employee in the industry. They are not meant to provide labor at no cost for work that the company must have done, but to observe and learn from an employee paid to do that work already.