SDNY.jpgAuthored by Robert Whitman

Advocates for interns seeking wage payments under federal and NY law received some welcome news this week with the decision in Glatt v. Fox Searchlight Pictures, Inc. [here].  As we have discussed previously [See here, here, here], Glatt is one of a number of recent cases brought on behalf of interns, paid or unpaid, who allege that they should have been classified as employees and entitled to receive minimum wage (and, if applicable, overtime).

Just a few weeks ago, the trendlet of internship filings may have appeared to be waning after a decision denying class certification in a case involving interns for a number of Hearst publications [See here].  The Glatt decision – a grant of summary judgment on the merits – is sure to ease the sting for plaintiffs of the loss in Hearst, and signals that employers should not be complacent or expect this wave to subside any time soon.

Glatt involved interns who worked on production of the film Black Swan.  Judge William Pauley of the Southern District of New York, after first deciding a complex issue of joint-employment and dismissing one intern’s claims (under California law) as untimely, held that the interns should have been classified as employees and paid wages under the FLSA and NY Labor Law.

The court applied the six-factor test articulated by the U.S. Department of Labor for determining whether a worker is a bona fide intern [See here].  In deferring to the DOL factors, the judge refused to adopt the “primary beneficiary” test advocated by the defendants and adopted by other courts.  Under that test, the court decides whether the benefits of the internship accrue more to the intern than to the engaging entity.  Judge Pauley said that test is “subjective and unpredictable,” such that “an employer could never know in advance whether it would be required to pay its interns.”

The court then held that five of the six DOL factors weighed in favor of employee status for the Black Swan interns.  Specifically:

  • they did not receive any formal training or education during the internship;
  • they benefitted from the experience only in a manner “incidental to working in the office like any other employee” and not as “the result of internships intentionally structured to benefit them”;
  • they “performed routine tasks” – such as filing, taking lunch orders, and answering phones – that “would otherwise have been performed by regular employees”;
  • the company “obtained an immediate advantage” from the interns’ work; and
  • the interns did not appear to be entitled to a job at the end of the internships.

As to the sixth factor – whether the interns were paid – the court acknowledged that the interns “understood they would not be paid,” but said this factor “adds little,” since the FLSA does not allow employees to waive their entitlement to wages.

While other courts may not follow Judge Pauley’s lead, Glatt is sure to serve as a roadmap for plaintiffs’ counsel who are looking to capitalize on the recent growth (if anecdotal reports are to be believed) of internships in private-sector workplaces as a consequence of the sluggish job market.

The case should thus be an object lesson for employers:  the mere fact that a worker is labeled an “intern,” and is willing to work for free (or work for pay without getting minimum wage and overtime premiums), is not by itself enough to remove the worker from the coverage of wage-hour laws.  After Glatt, careful compliance remains as important as ever.