“FLSA and the Unpaid Intern: To Pay or Not to Pay?
” occurred in the same week as two significant legal developments that have specialists in the field predicting a wave of lawsuits challenging unpaid internships in a variety of fields, particularly movies and publishing.
“One of the reasons this issue has garnered so much attention is because of the high-profile cases,” said Monique Gougisha Doucette, a shareholder at Ogletree, Deakins, Nash, Smoak & Stewart P.C. of New Orleans, said.
On June 11, a federal district judge in Manhattan ruled that Fox Searchlight Pictures had violated federal and New York minimum wage laws by not paying production interns. A story in The New York Times
reported that U.S. District Court Judge William H. Pauley III said unpaid internships should be allowed only in very limited circumstances.
Two days later, two former interns at The New Yorker
magazine and W Magazine
sued Condé Nast Publications for violations of the minimum wage provisions included in the Fair Labor Standards Act. Thomson Reuters news service reported that experts said Pauley’s decision involving the movie production of “Black Swan” and the Condé Nast suit could encourage more legal actions and force employers to reconsider use of unpaid interns.
Doucette, in her remarks at the ABA program, noted that in the “Black Swan” case, the judge concluded that the interns operated as unpaid production workers and that Fox Searchlight “did not offer training similar to an educational environment.”
Melinda Burrows, head of compliance at the international automated retailer Coinstar Inc., said this and prior cases underscored the importance of attorneys making their “clients aware that the [Department of Labor] is looking at this.” She suggested employers who use unpaid interns “take a good, hard look at their program.”
Scott M. Pollins, of counsel at Willig, Williams & Davidson in Philadelphia, said these cases are attractive to pursue because plaintiffs can be awarded attorney’s fees besides retroactive pay for the intern. Pollins’ clients are typically individuals who claim they have suffered discrimination in the workplace. He said offering unpaid internships could also be discriminatory, suggesting that “only the people with financial means can afford to take advantage” of many unpaid internship programs.
Moderator Stephen A. Mazurak, professor of law at the University of Detroit Mercy School of Law, discussed several landmark cases, including a 1985 U.S. Supreme Court decision involving the Tony and Susan Alamo Foundation. In that case, the high court found FLSA applied even if the intern accepted unpaid status and actually preferred it. Although the Alamo Foundation was a nonprofit, it used interns in its commercial enterprises.
Mazurak pointed to DOL Fact Sheet No. 71, which provides guidance to for-profit employers on whether interns must be paid minimum wage and overtime under FLSA. Specifically, for an internship to occur without compensation, it must meet thesesix criteria
- The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees but works under close supervision of existing staff;
- The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
The ABA program was presented by the ABA Section of Labor and Employment Law
and the ABA Center for Professional Development.