Unpaid Interns Win Major Ruling in ‘Black Swan’ Case — Now What?

Source: ProPublica

By Blair Hickman and Jeremy B. Merrill
June 12, 2013, 4:18 p.m.

Yesterday, a federal judge issued the first major ruling on the illegality of unpaid internships in recent years, challenging a rise in corporate reliance on uncompensated workers.

Judge William H. Pauley III ruled that Fox Searchlight Pictures violated U.S. and New York minimum wage laws by not paying two production interns for work done on the set of the movie “Black Swan.”

Pauley ruled that the interns had essentially completed the work of paid employees – organizing filing cabinets, making photocopies, taking lunch orders, answering phones – and derived little educational benefit from the program, one of the criteria for unpaid internships under federal law. Pauley also ruled that the plaintiffs were employees and thus protected by minimum wage laws.

“I hope this sends a shockwave through employers who think, ‘If I call someone an intern, I don’t have to pay them,’” Eric Glatt, one of the plaintiffs, told ProPublica. “Secondarily, it should send a signal to colleges and universities who are rubber-stamping this flow of free labor into the marketplace.”

The “Black Swan” case is one of three class-action lawsuits in recent years that have alleged wage violations by companies, and the first to result in a ruling; one other settled out of court, and the other was denied class-action status. This week’s decision could have broader implications for companies and courts across the country.

As we’ve reported, internships in the for-profit sector must meet six criteria to qualify to be unpaid under federal minimum wage law. One is that the internship must benefit the intern; another is that the company must derive no “immediate advantage” from the intern’s work.

Previously, some courts have ruled that interns — legally considered trainees — can be unpaid if they derive the primary benefit from their work, an argument Fox Searchlight also relied on in this case.

But Pauley called the “primary beneficiary” test too “subjective and unpredictable,” and focused instead on whether the company derived an immediate advantage from the interns’ work.

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