October 16th, 2012 by Ramon Rivera
Jobs in entertainment are highly coveted and, as a result, many budding industry professionals are willing to work for free to simply to get their foot in the door. Unfortunately, unpaid internships can also mean big legal trouble if the interns actually qualify as employees.
Fox Entertainment Group is currently finding this out the hard way. This summer, two interns who worked on Fox Searchlight’s Oscar winning film Black Swan filed a lawsuit claiming that the company’s unpaid internship program violated the minimum wage and overtime requirements of the Fair Labor Standard Act.
As detailed in the complaint, “Fox Searchlight’s unpaid interns are a crucial labor force on its productions, functioning as production assistants and bookkeepers and performing secretarial and janitorial work. … In misclassifying many of its workers as unpaid interns, Fox Searchlight has denied them the benefits that the law affords to employees.”
Last week, a New York federal judge granted the plaintiffs’ request to amend the complaint. As a result, the lawsuit can now be expanded to include interns who worked for other divisions as well as Fox’s corporate offices.
As we have detailed on the Scarinci Hollenbeck Business Law Blog, interns can be tremendous business assets, so long as you follow the rules. Most importantly, internships in the “for-profit” private sector will most often be viewed as employment, unless the following Department of Labor test is satisfied:
- 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.
If all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the law’s minimum wage and overtime provisions do not apply to the intern. However, interns who do qualify as employees generally must be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek.