The days of doing menial office work for free may soon be in the past. This week, a judge ruled in favor of two former unpaid interns. Judge William H. Pauley III declared that Fox Searchlight Pictures violated the law by not paying former interns Eric Glatt and Andrew Footman. Labor advocates are hoping it will be the start of a sea change in the way employers offer internships. But that shift could be a long time in coming.
Glatt and Footman filed suit in 2011 against Fox Searchlight, saying their internships on the production of the 2009 film "Black Swan" violated labor laws. The interns did work such as filing, making coffee, getting signatures on documents, and assembling office furniture, and claimed that they should have been paid for that work under the Fair Labor Standards Act.
That law lays out six criteria that an internship must meet in order to be unpaid. Among those are the stipulations that the internship must be for the benefit of the intern and must not displace other employees. In addition, the employer of an unpaid intern should get "no immediate advantage" from the intern's presence – in other words, the intern ought to be there to shadow employees and learn, but not to do productive work.
The judge found that the "Black Swan" internships fell far from meeting these standards. The decision states that, while Glatt and Footman "received some benefits from their internships" in the form of résumé fodder, references and production knowledge, the interns got the short end of this deal: "Searchlight received the benefits of their unpaid work, which otherwise would have required paid employees," the judge wrote, adding that "the defendants were the 'primary beneficiaries' of the relationship, not Glatt and Footman."
"The way the judge interpreted that is they're getting experience by being real employees, and therefore they need to be paid as real employees," says Edwin Koc, director of research at the National Association of Colleges and Employers.
This is the first decision of its kind favoring unpaid interns and classifying them as workers, says Juno Turner, an attorney with Outten & Golden LLP, the New York law firm that argued the case, and she believes the effects could be far-reaching.
"It should serve as a wake-up call to employers that the types of unpaid internships that have become so routine in our society are in fact unlawful," Turner says.
That may imply that many people have been employed unlawfully as unpaid interns, perhaps without themselves or their employers even realizing it. Questions over the legality of these internships have been years in the making. As a Labor Department official put it in a 2010 New York Times article, "If you're a for-profit employer or you want to pursue an internship with a for-profit employer, there aren't going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law."
The Fair Labor Standards Act has long had clear criteria for unpaid interns, so how did employers get into the unpaid-intern habit? One attorney says it's a function of employers not understanding the law, instead opting to simply do what other employers are doing.
"It's not well understood by lay people in a lot of respects, and there are a lot of different practices, and this is one, that develop over time and become widespread," says Laura O'Donnell, a labor and employment law attorney at Haynes and Boone, a Texas-based law firm. Whether or not employers consult with lawyers, she says, they might think to themselves, "Everybody does it, or my neighbor down the street does it, so why can't we do it?"
Like Turner, O'Donnell believes that the ruling could make for a reduction in employers offering unpaid internships.
"With all the media attention that unpaid internships have received, there's going to be a lot of companies looking at their programs," she says. Rather than risk an expensive lawsuit, many companies may make their unpaid internships more educational in nature, end their unpaid internship programs altogether or find a way to convert internships from unpaid to paid.
Corrected 06/13/13: A previous version of this article incorrectly stated the class action lawsuit against Hearst was thrown out. The case is ongoing.