Sounds like the perfect solution for a small law firm—bring in a law student or paralegal intern to provide some extra help around the office—without spending a dime because everyone knows that such internships are unpaid. Right?
Apparently that’s not always the case anymore, thanks to a class action suit brought in 2011 by two unpaid movie production interns (Eric Glatt and Alexander Footman) against Fox Searchlight Pictures, Inc., and Fox Entertainment groups, Inc. (collectively “Fox”).
In their lawsuit, Glatt and Footman alleged that, by classifying them as "unpaid interns" rather than "paid employees," Fox was in violation of federal labor laws.
In the Fox case, the court relied on U.S. Department of Labor Fact Sheet #71 in evaluating whether interns working in for-profit businesses are actually working in positions that are exceptions to the employer-employee relationship. Specifically, the six criteria listed on the fact sheet include:
- The internship, even though it includes actual operation of the facilities of the employer, is similar to training which 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 Fact Sheet goes on to state that “If all of the factors listed above are met, an employment relationship does not exist under the FLSA and the Act’s minimum wage and overtime provisions do not apply to the intern.”
In applying these criteria in the Fox case, the court found that Fox did, indeed, receive benefit from the unpaid interns’ work (mostly routine tasks that, without the interns, would have required paid employees). There was no evidence to show that the two interns were entitled to jobs upon completion of the internships, nor did they expect to be paid.
According to an article in Nevada Business magazine by attorney Robert Rosenthal, “the court found that plaintiffs were still improperly classified as unpaid interns and instead were ‘employees.’ The benefits plaintiffs [Glatt and Footman] may have received—such as knowledge of how a production office functions or references for future jobs—were the results of simply having worked as any other employee works, not of internships designed to be uniquely educational and of little utility to the employer.”
Be aware that unpaid wages and overtime can be recovered for a period of two years (three years if it is deemed to be a willful violation).
So, before you bring in an intern to do your filing, answer your phones, and make Starbucks runs for you during the summer months, carefully evaluate how you handle interns and their training. Are you actually (unintentionally) entering into an employer-employee relationship when all you really want is a little free help?