As summer approaches, a new set of high school and college age employees embark on corporate America to gain valuable experience and learn new businesses. As this time approaches, companies should be mindful of a litigation trend sweeping the country in relation to unpaid internships.
In June 2013, Judge William Pauley III of the Southern District of New York ruled that Fox Searchlight violated federal and state minimum wage laws by not paying two interns on the set of the movie The Black Swan. Glatt v. Foxx Searchlight Pictures, Inc., 2013 US. Dist. Lexis 82079 (S.D.N.Y. June 11, 2013).
Judge Pauley utilized six principals supplied by the Department of Labor in an April 2010 Fact Sheet to come to the determination that the interns should have been paid: "(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." DOL WHD Fact Sheet # 71 (April 2010).
Both complaints to the Department of Labor and private suits have exponentially increased in the last five years. As your company begins implementing internship programs for the summer, it is essential to examine the program itself, and the agreement between the intern and the company, to limit any exposure of potential liability.
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