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Unpaid Interns Win Major Ruling in ‘Black Swan’ Case — Now What?—Blair Hickman and Jeremy B. Merrill

Yesterday, a federal judge issued the first major ruling on the illegality of unpaid internships in recent years, challenging a rise in corporate reliance on uncompensated workers.

Judge William H. Pauley III ruled that Fox Searchlight Pictures violated U.S. and New York minimum wage laws by not paying two production interns for work done on the set of the movie “Black Swan.”

Pauley ruled that the interns had essentially completed the work of paid employees – organizing filing cabinets, making photocopies, taking lunch orders, answering phones – and derived little educational benefit from the program, one of the criteria for unpaid internships under federal law. Pauley also ruled that the plaintiffs were employees and thus protected by minimum wage laws.

“I hope this sends a shockwave through employers who think, ‘If I call someone an intern, I don’t have to pay them,’” Eric Glatt, one of the plaintiffs, told ProPublica. “Secondarily, it should send a signal to colleges and universities who are rubber-stamping this flow of free labor into the marketplace.”

The “Black Swan” case is one of three class-action lawsuits in recent years that have alleged wage violations by companies, and the first to result in a ruling; one other settled out of court, and the other was denied class-action status. This week’s decision could have broader implications for companies and courts across the country.

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Many employers attempt to use academic credit as a legal justification for unpaid internships. But in his ruling, Pauley explicitly noted that academic credit doesn’t automatically pave the way for no pay.

Rachel Bien, an attorney who represented the plaintiffs in the Fox case, said yesterday’s ruling shows that “that justification [of college credit] is not founded on the law.”

“The law focuses on what employers are doing and if they’re offering a bona fide training program,” Bien explained

One last point to note: The judge also certified class-action status for this lawsuit, which means other interns at Fox may be eligible for back wages. Pauley’s ruling is contrary to that in a similar case against the Hearst Corporation. A judge declined to grant the Hearst case class-action status, saying the interns (at various magazines and with various duties) didn’t have enough in common.

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