Southern District of New York Rules That Movie Studio Was Required To Pay Its Interns; Numerous Lawsuits By Unpaid Interns In New York Follow

On June 11, 2013, in Glatt v. Searchlight Pictures Inc., No. 11 Civ. 6784, 2013 WL 2495140 (S.D.N.Y. June 11, 2013) (Pauley, J.), the U.S. District Court for the Southern District of New York held that defendants Fox Searchlight Pictures Inc. (“Fox Searchlight”), a producer and distributor of feature films, and Fox Entertainment Group, Inc. (“Fox Entertainment”), the parent company of Fox Searchlight, violated the federal Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (the “FLSA”) and the New York Labor Law (the “NYLL”) by not paying two interns who had worked on production of the film Black Swan in New York.

Rather, the U.S. District Court for the Southern District of New York held in Glatt that the plaintiff production interns “are ’employees’ covered by the FLSA and [the] NYLL.”  As a result, held the Glatt Court, both federal and New York State wage and hour laws required Fox Searchlight and Fox Entertainment (together, “Fox”) to pay the production interns not less than the minimum wage of $7.25 per hour.

The Glatt decision breaks no new ground.  Rather, in Glatt, the Southern District of New York merely applied the U.S. Department of Labor (the “U.S. DOL”)’s criteria for whether an employer must pay its interns the minimum wage and overtime compensation.

As my April 14, 2010 blog post explained, under the regulations and Wage and Hour letter rulings of the U.S. DOL, interns or trainees are not employees within the meaning of the FLSA, and thus need not be compensated by an employer, if all of the following criteria apply:

1. The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in an educational environment;
2. The training is for the benefit of the intern;
3. The intern does not displaces 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.

The U.S. DOL’s above criteria (for whether an employer must pay its interns the minimum wage and overtime compensation) closely track the U.S. Supreme Court’s 1947 decision in Walling v. Portland Terminal Co., 330 U.S. 148 (1947).

The Glatt Court summarized the reasons that Fox Searchlight’s and Fox Entertainment’s classification of the two production interns as unpaid interns was improper, and the reasons that the production interns were ’employees’ covered by the FLSA and the NYLL, as follows:

[The production interns] worked as paid employees work, providing an immediate advantage to their employer and performing low-level tasks not requiring specialized training.  The benefits they may have received — such as 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.

In addition to holding that Fox was required to pay the two production interns at least the minimum wage, the Glatt Court granted the motions of a third unpaid intern, who’d worked in Fox Searchlight’s corporate offices in New York, for class certification of her NYLL claims and conditional certification of an FLSA collective action.

Even though the Glatt decision merely applied existing law, Fox’s prominence and the heavy publicity which the Fox interns’ legal victory has received has unleashed what one newsroom terms “a rising tide of lawsuits brought by unpaid interns,” primarily in New York.

In the seven weeks since the Southern District of New York’s issued the Glatt decision, workers in the entertainment, public relations/marketing, and media/publishing industries have filed at least nine lawsuits alleging that their employers improperly categorized them as unpaid trainees and failed to pay them the minimum wage or overtime pay.  Eight of these nine lawsuits are venued either in the U.S. District Court for the Southern District of New York (the Court which decided Glatt) or in New York state court in Manhattan. 

The defendant employers in these unpaid intern lawsuits include such prominent companies as NBC, Warner Music, Gawker Media, and Condé Nast.  Further, the plaintiffs in most of these lawsuits seek class certification of NYLL claims brought by them and/or certification of FLSA collective actions.

Take-Aways for Employers

The Glatt decision illustrates that, in general, businesses must compensate their interns or trainees in New York.  As my April 14, 2010 blog post observed:

A rule of thumb is that for-profit companies in New York State must pay their interns or trainees unless, among other requirements, the interns or trainees are obtaining vocational experience and educational credit by working; are working for their own benefit rather than the company’s; and, by working, are conferring no immediate benefit on the company.

Businesses should consult with an experienced labor and employment attorney before allowing students or other interns to work without compensation.

Call the Law Offices of David S. Rich, LLC at (347) 941-0760 to speak with a knowledgeable labor and employment lawyer about ensuring that your company complies with overtime pay and other wage and hour laws, or to retain a skilled overtime attorney to defend your company in unpaid overtime lawsuits or other wage and hour litigation.