With job openings scarce for young people, the number of unpaid internships has climbed in recent years, leading federal and state regulators to worry that more employers are illegally using such internships for free labor.
Convinced that many unpaid internships violate minimum wage laws, officials in Oregon, California and other states have begun investigations and fined employers. Last year, M. Patricia Smith, then New York’s labor commissioner, ordered investigations into several firms’ internships. Now, as the federal Labor Department’s top law enforcement official, she and the wage and hour division are stepping up enforcement nationwide.
The Labor Department says it is cracking down on firms that fail to pay interns properly and expanding efforts to educate companies, colleges and students on the law regarding internships.
“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,” said Nancy J. Leppink, the acting director of the department’s wage and hour division.
Sounds reasonable, right?
A Federal District Court judge in Manhattan ruled on Tuesday that Fox Searchlight Pictures had violated federal and New York minimum wage laws by not paying production interns, a case that could upend the long-held practice of the film industry and other businesses that rely heavily on unpaid internships.
In the decision, Judge William H. Pauley III ruled that Fox Searchlight should have paid two interns on the movie “Black Swan,” because they were essentially regular employees.
Judge Pauley rejected the argument made by many companies to adopt a “primary benefit test” to determine whether an intern should be paid, specifically whether “the internship’s benefits to the intern outweigh the benefits to the engaging entity.” Judge Pauley wrote that such a test would be too subjective and unpredictable.
Instead, the judge forcefully called for following criteria that the Department of Labor has laid out for unpaid internships.
Those rules say unpaid internships should not be to the immediate advantage of the employer, the work must be similar to vocational training given in an educational environment, the experience must be for the benefit of the intern and the intern’s work must not displace that of regular employees.
“Undoubtedly Mr. Glatt and Mr. Footman received some benefits from their internships, such as résumé listings, job references and an understanding of how a production office works,” Judge Pauley wrote. “But those benefits were incidental to working in the office like any other employees and were not the result of internships intentionally structured to benefit them.” Judge Pauley added that “Searchlight received the benefits of their unpaid work, which otherwise would have required paid employees.”
I wouldn’t think this would be news to employers, that one has to pay employees, but it seems to be. Can we work any harder at devaluing the work that people do? Is this really the direction we want to go, where we don’t pay people at all?