Unpaid Hollywood “Interns” Are Really “Employees”

Fox Searchlight Pictures violated federal and state labor laws by misclassifying photocopying and coffee-fetching interns as employees, according to a recent decision handed down by the United States District Court for the Southern District of New York.  The case, Glatt v. Fox Searchlight Pictures, Inc., __ F. Supp. 2d. __, 2013 WL 2495140 (S.D.N.Y. June 11, 2013), arises from the set of the Academy Award winning motion picture “Black Swan,” and reinforces the narrow application of the “trainee” exception to the minimum wage requirements of the Fair Labor Standards Act (“FLSA”).

Eric Glatt and Alexander Footman were low-level staffers who performed a variety of menial tasks during production and post-production “internships” on “Black Swan.”  Despite being labeled as “interns,” Glatt and Footman argued they were in fact “employees” covered by the FLSA and New York Labor Law.  Following a brief review of the U.S. Supreme Court’s landmark decision in Walling v. Portland Terminal Co., 330 U.S. 148 (1947), which created the “trainee” exception, the Court, in the absence of any guiding precedent from the Second Circuit, endorsed the U.S. Department of Labor’s approach to determining whether internships may indeed be unpaid.  Citing to the Department’s Fact Sheet #71, the Court focused on the following criteria:

(1)   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;

(2)   The internship experience is for the benefit of the intern;

(3)   The intern does not displace regular employees, but works under close supervision of existing staff;

(4)   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;

(5)   The intern is not necessarily entitled to a job at the conclusion of the internship; and

(6)   The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

In applying these criteria to the undisputed facts of the case, the Court ruled that the benefits received by Glatt and Footman “such as knowledge of how a production or accounting office functions or references for future jobs—are the results of simply having worked as any other employee works, not of internships designed to be uniquely educational to the interns and of little utility to the employer.  They received nothing approximating the education they would receive in an academic setting or vocational school.”  Indeed, had Glatt and Footman not performed the tasks they did, the work would have been done by paid employees.  Fox’s assertion that Glatt and Footman understood they would not be compensated for their services made little difference, as the FLSA does not allow employees to waive their entitlement to be paid at least the statutory minimum wage.

In the end, the Court concluded that the relationship was a clear one-way street favoring Fox, and, moreover, “a far cry from Walling.”  Glatt and Footman’s motion for summary judgment was granted, and the Court’s reliance on Fact Sheet #71 over the “primary benefit test” utilized by other circuits puts a feather in the cap of the Department of Labor.  The decision also serves as another timely reminder to employers that legal analyses under federal and state labor laws will transcend workers’ assigned titles and focus on the substance and benefit of their roles.

Lawrence Peikes and Joshua Walls, Wiggin and Dana LLP

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