Wednesday, June 26, 2013

The Unpaid Internship under Federal Law

A federal judge has held that unpaid interns for a movie production company were employees under the federal Fair Labor Standards Act (FLSA).  The plaintiffs were unpaid interns for a movie production company in the filming and post-production of the movie Black Swan.   After the internships concluded, the interns sued under the FLSA for its wage and hour protections (minimum wage,  etc.).

Before ruling for the interns (at the Summary Judgment stage) the Judge noted that because the FLSA is a “remedial” statute an “expansive interpretation of its provisions” is warranted so that the statute will have “the widest possible impact in the national economy.”   (emphasis added)

The Judge first found that an employment relationship existed under both the Formal Control Test and the Functional Control Test.

The Judge then looked at whether the movie interns fell within the trainee exception to FLSA coverage established by the U.S. Supreme Court in Walling vs Portland Terminal Co., 330 U.S. 148 (1947).  The Judge also relied on a U.S. Department of Labor Fact Sheet (FS71) based on Walling that lists six criteria for determining whether a person is a trainee not entitled to employee status.  The movie production company argued that the DOL criteria were not an accurate reflection of the law and for a primary beneficiary test.  But the Judge disagreed, finding that the DOL criteria – which use a sole beneficiary test - had “support in Walling” and are entitled to deference. 
The Judge then examined the criteria and found that the interns were not trainees and were entitled to FLSA protections because i) the interns were not given training like in an educational environment, ii) the interns were not the sole beneficiary of the internships, iii) the interns’ work displaced paid employees, and iv) the interns’ work was “essential” and provided immediate advantage to the employer.  The Judge noted that although the interns knew going in that they would not be paid that did not matter because employees are not permitted to decline the protections of the FLSA. 

The decision is Glatt v. Fox Searchlight Pictures Inc., 11 Civ 6784 (WHP) United States District Court for the Southern District of New York.  Memorandum and Order issued June 11, 2013.

Coming soon: The law on unpaid internships in Illinois

Submitted by Brian D. Moore, Class of ’92.

1 comment:

Michael W. Huseman said...

I'm pretty sure that my fleet of unpaid interns falls into the trainee exception. At least I hope so.