An employee by any other name is still an employee, even if that other name is “intern.” On June 11, 2013, the District Court for the Southern District of New York granted summary judgment to several former unpaid interns of Fox Searchlight Pictures, holding that they were, in fact, employees entitled to wages under the Fair Labor Standards Act (“FLSA”) and New York Labor Law (“NYLL”).

Glatt v. Fox Searchlight Pictures, Inc.

In Glatt v. Fox Searchlight Pictures, Inc., the Court tackled several issues, including whether or not two individuals who worked on production and/or post-production of the film “Black Swan” were properly classified as unpaid “interns” or whether they were “employees” who should have been compensated for the time they worked.

The Test

In analyzing whether the two plaintiffs were properly classified as interns, the Court rejected Fox Searchlight’s argument that the “primary benefit test” – in which the determination is whether “the internship’s benefits to the intern outweigh the benefits to the engaging entity” – should apply. Calling that test “subjective and unpredictable,” the Court instead relied on the six factors identified by the United States Department of Labor in Fact Sheet # 71. Pursuant to those factors, in order for a job to be classified properly as an internship, it must meet the following criteria:

  1. the internship must be similar to training provided in an educational environment;
  2. the internship must be for the intern’s benefit;
  3. the intern must work under close direction of existing employees and can’t displace a regular employee;
  4. the employer does not derive immediate advantage from the intern’s work, and may actually have its operations impeded;
  5. completion of the internship does not guarantee a job offer from the employer; and
  6. the parties understand that the position is unpaid.

The Holding

Looking at the “totality of the circumstances” and noting that the standards are generally the same under the FLSA and NYLL, the Court found that the plaintiffs were classified improperly as unpaid interns, reasoning:

“They worked as paid employees work, providing an immediate advantage to their employer and performing low-level tasks not requiring specialized training The benefits they may have received – 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.”

A Note About Neighboring New Jersey’s Law

While the Glatt case addressed federal and New York law, it is worth noting that New Jersey has an even more stringent test for what the New Jersey Child Labor Law regulations call “student learners.” Unpaid workers may only be classified as student learners if they satisfy the factors set forth in N.J.A.C. 12:58-1.2, some of which overlap with the federal law, but others which are novel.

Conclusion

Employers who engage unpaid interns or are considering engaging unpaid interns should carefully consider whether the engagement is properly classified as an internship, or in New Jersey, as a student learner. Misclassifying employees can subject employers not only to significant back pay awards, liquidated damages, attorneys’ fees and penalties, but could render the misclassified individuals retroactively covered by a variety of other employment laws, such as the Family and Medical Leave Act, for example. For answers to questions regarding the requirements of an internship and to assist employers in assessing whether their unpaid interns are properly classified, please feel free to contact an attorney in the Gibbons Employment & Labor Law Department.

Carla N. Dorsi is a Director in the Gibbons Employment & Labor Law Department.