Harold Baer, Labor / Employment, S.D.N.Y.

Uh-Oh! Federal Judge Says We Might Have to Start Paying Interns

Two big rulings strike a blow for the rights of interns.

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For the record, that was not the “royal ‘we'” in the title — here at Above the Law, we pay our interns. But a whole lot of folks don’t, because when no one else is hiring, companies can get away with offering to hire folks for the promise of experience and a cup of coffee (disclaimer: “Cup of Coffee” not provided).

Mercifully, law firms haven’t succumbed to the impulse to bring on interns for free. Oops, spoke too soon (fourth item).

But Judge William Pauley of the Southern District of New York delivered some big wins for unpaid interns yesterday…

These are still just a couple of positive decisions for interns, so it’s too early to declare final victory for lowly interns. Another S.D.N.Y. judge, Judge Harold Baer, gave interns the shaft a few weeks ago by denying class certification for all the interns jacked over by Hearst.

Judge Pauley actually ruled in favor of interns in two cases involving unpaid entertainment industry interns. First up, via the Hollywood Reporter:

The lawsuit was first brought in late 2011 by two interns — Alex Footman and Eric Glatt — who both worked on Fox Searchlight’s Black Swan and claimed that the company’s unpaid internship program violated minimum wage and overtime laws.
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Regarding Footman and Glatt, the judge grants summary judgment to them that Searchlight was their “employer,” as that term is defined in the Fair Standards Labor Act and New York Labor Laws.

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Black Swan was about the slow torture a woman endures punishing herself for her art. In a very meta move, that’s apparently how Fox Searchlight treated Footman and Glatt.

(Of note, one of the plaintiffs, Eric Glatt, is a rising 2L at Georgetown Law. His next employer should be on notice.)

Fox Searchlight tried the age-old Hollywood tactic of “throwing someone else under the bus” by blaming the production companies lower on the totem pole. Judge Pauley didn’t buy it.

The Labor Department has six criteria for determining if an internship can be unpaid:

These factors include whether the internship is similar to training that would be given in an educational environment, whether it is for the benefit of the intern, whether the intern displaces regular employees, whether the employer derives immediate advantage, whether the intern isn’t necessarily entitled to a job after the conclusion of the internship, and the understanding about no entitlement to wages.

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Judge Pauley decided:

Considering the totality of the circumstances, Glatt and Footman were classified improperly as unpaid interns and are ’employees’ covered by the FLSA and NYLL. They worked as paid employees work, providing an immediate advantage to their employer and performed low-level tasks not requiring specialized training. The benefits they may have received — such as the 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. This is a far cry from [the Supreme Court’s decision in] Walling, where trainees impeded the regular business of the employer, worked only in their own interest and provided no advantage to the employer. Glatt and Footman do not fall within the narrow ‘trainee’ exception to the FLSA’s broad coverage.

While Judge Pauley doesn’t quite say it there, this passage highlights the larger problem with the expansion of unpaid internships, specifically, the downward pressure they place on the job market. If someone is willing to do a regular employee’s job for free, a regular employee’s job is replaced. Wages go down, joblessness goes up.

Too many companies have skirted the rules on internships, replacing their employees with desperate college grads at the expense of full-time employees. There are up to 1 million unpaid internships in the United States, according to Ross Eisenbrey, vice president of the Economic Policy Institute, and about 4.4 million long-term unemployed Americans. Holding companies to the fire in requiring every unpaid internship to really constitute something different than a free, fungible employee is an important step in rebuilding the economy.

But Judge Pauley wasn’t done striking blows for interns. In a separate case, Judge Pauley broke with Judge Baer and certified a class to pursue claims against Fox Entertainment Group for its internship program abuses:

The federal judge in New York has certified a class action that will explore internships throughout the corporate departments at Fox Entertainment Group. Unlike a fellow judge who recently refused to certify a class action for some 3,000 fashion magazine interns working at Hearst, this judge sees commonality and the other factors that are required to move forward with such a class action.

Specifically, the judge rules “[plaintiff Eden] Antalik has identified several common questions relevant to determining NYLL violations, including: (1) whether Defendants derived an immediate advantage from interns’ work, (2) whether interns displaced regular employees, and (3) whether FEG’s internship program was for the benefit of interns.”

The judge adds, “Here, the relatively small recoveries available to individual plaintiffs make a class action a more efficient mechanism.

The class will be represented by Outten & Golden.

Fighting back against these abuses requires two-prongs: (1) renewed focus on the regulations governing internships, and (2) allowing interns to avail themselves of class certification to practically enforce the rules. In one day, Judge Pauley pushed both.

The full Glatt decision is reproduced on the next page….

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