Money & Business

'Black Swan' Ruling Could Impact Unpaid Internships

By Daniel Ford / Jun 17, 2013 (Fox Searchlight photo)

Two unpaid interns who worked on the movie Black Swan won a court case that could have far-reaching consequences for all internship programs.

A New York judge ruled that two unpaid interns on the movie Black Swan worked as paid employees” and that Fox Searchlight owes them back pay.

So often employers can become complacent about these types of abuses. Everybody does it, and because everybody does it, everything is OK.

Some media outlets are calling the U.S. District Judge William H. Pauley III’s ruling the “beginning of the end for unpaid internships.”

But is that the reality? And if it is, how could it affect your association’s internship programs?

The decision: The two interns working on Black Swan won the case in large part because Fox Searchlight violated guidelines for unpaid internships outlined in the Fair Labor Standards Act. For an unpaid internship to be legitimate, the Department of Labor must find that it fully meets the law’s six criteria.  The guidelines (included on page 20 of the court documents) says an unpaid internship must be “similar to training which would be given in an educational environment,” the employer “derives no immediate advantage from the activities of the intern,” and the position must be for the “benefit of the intern.” The court ruled that Eric Glatt and Andrew Footman, who brought the suit against Fox, were doing grunt work that solely benefited their employer and “received nothing approximating the education they would receive in an academic setting or vocational school.”

The future of internships: There are some legal experts who assert that all unpaid internships are illegal. “If it’s a private sector employer, they’re pretty much all illegal,” said Catherine Ruckelshaus, legal co-director of the National Employment Law Project, to Yahoo! Finance. “Labor and employment laws require someone to file a complaint, so it’s not enforced. The interns don’t want to be blacklisted; they want the experience, so they’re not going to complain.” Attorneys foresee more such lawsuits now that interns are more aware of the law. “This trend is probably going to expand beyond media companies and beyond New York,” Laura O’Donnell, a lawyer at Haynes & Boone in San Antonio who has written about interns and employment law, told Reuters. “I think employers in all industries across the country need to take note.” O’Donnell also told The Daily Beast that big employers are going to scrutinize their internship programs more, with “a lot of them” becoming extinct. “Ones that are really tied to a university, where there is a syllabus and it is closely supervised, I think those will continue and they should,” she said. “But so often employers can become complacent about these types of abuses. Everybody does it, and because everybody does it, everything is OK.”

The benefits of hiring paid interns: A recent study by the National Association of Colleges and Employers (NACE) found that 30 percent of college students will work at least one unpaid internship, and only 37 percent of graduates who worked as an unpaid intern received job offers. On the other hand, 63 percent of 2013 graduates with paid internships received at least one job offer, and the median starting salary for those grads was $51,930—compared to $36,000 for graduates with an unpaid internship on their resume. “This is the third consecutive year that NACE’s annual student survey has captured internship data for paid and unpaid interns,” said Marilyn Mackes, NACE executive director, in a statement announcing the study results. “In each survey, paid interns exceeded their peers in job offers and starting salaries.”

What is your association’s stance on unpaid internships? Let us know in the comment section.

Daniel Ford

Daniel Ford is a contributor to Associations Now. More »

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