Fox Entertainment Group.
Over the past several years, the concept of internship has come under greater scrutiny. For instance, when does an intern actually cross the threshold that makes her or him an employee?
A five-year legal battle over unpaid internships finally culminated on July 12th when Fox Entertainment Group settled with several people who worked as unpaid interns for the company’s television, film and digital divisions.
The lawsuit originated in September of 2011 when Eric Glatt and Alex Footman, who worked as unpaid interns on the production of “Black Swan,” a film produced by Fox Searchlight Pictures. They claimed that the company used them to perform “menial tasks” that should have been performed by company employees, and that they received no educational benefits from their internships. More plaintiffs joined the suit and it eventually became a class action.
The U.S. Department of Labor lists the following criteria for unpaid internships:
- 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.
Absent of all of the above criteria, an employer/employee relationship then exists – meaning the employer must pay the person doing the work at least the minimum wage.
Two years later the plaintiffs celebrated a huge victory in summary judgment, which sent shock-waves throughout corporate America and had companies scurrying to review and update their internship policies.
But the victory was short-lived.
Two years later on July 2015, the 2nd Circuit Court of Appeals vacated the summary judgment ruling. The court stated that the original trial judge focused too much on the Department of Labor criteria, and should have focused more on how the internship related to the intern’s academic coursework, academic credits, and academic commitments in regards to the school calendar. 2nd Circuit Judge John Walker stated the following opinion: “In sum, we agree with the defendants that the proper question is whether the intern or the employer is the primary beneficiary of the relationship.”
When the 2nd Circuit Court of Appeals denied a rehearing, the case headed back to Federal Court in New York City. To avoid the risks and expense both parties faced an agreement was finally reached. The two original plaintiffs, Glatt and Footman, received $7,500 and $6,000 respectively, but the total amount of money in the payout is yet to be disclosed.
If you plan of interning at a company, or if you are a company using interns, it is more important than ever that you fully understand your rights and responsibilities.