Unpaid internships have long been a path of opportunity for students and recent grads looking to get a foot in the door in the entertainment, publishing and other prominent industries, even if it takes a generous subsidy from Mom and Dad.
But those days of working for free could be numbered after a federal judge in New York ruled this week that Fox Searchlight Pictures violated minimum wage and overtime laws by not paying interns who worked on production of the 2010 movie "Black Swan."
The decision by U.S. District Judge William H. Pauley III may lead some companies to rethink whether it's worth the legal risk to hire interns to work without pay. For many young people struggling to find jobs in a tough economy, unpaid internships have become a rite of passage essential for padding resumes and gaining practical experience.
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There are up to 1 million unpaid internships offered in the United States every year, said Ross Eisenbrey, vice president of the Economic Policy Institute, a liberal-leaning think tank. He said the number of internships has grown as the economy tumbled and he blamed them for exploiting young workers and driving down wages.
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In the ruling, Pauley said Fox should have paid the two interns who filed the lawsuit because they did the same work as regular employees, provided value to the company and performed low-level tasks that didn't require any specialized training.
The interns, Eric Glatt and Alexander Footman, performed basic administrative work such as organizing filing cabinets, tracking purchase orders, making copies, drafting cover letters and running errands.
"Undoubtedly Mr. Glatt and Mr. Footman received some benefits from their internships, such as resume listings, job references and an understanding of how a production office works," 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."
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Juno Turner, an attorney for the plaintiffs, said it was the first time a court had given employee status to young people doing the types of duties commonly associated with interns. The case is one of several that have been filed in recent years demanding that all interns deserve a salary.
"This is an incredibly important decision as far as establishing that interns have the same wage and hour rights as other employees," Turner said. "You can't just call something an internship and expect not to pay people when the interns are providing a direct benefit to the company."
In ruling for the interns, the judge followed a six-part test outlined by the Labor Department for determining whether an internship can be unpaid. Under the test, the internship must be similar to an educational environment, run primarily for the benefit of the intern as opposed to the employer, and the intern's work should not replace that of regular employees.
Glatt, the lead plaintiff, lamented the fact that unpaid internships have become so normal "people do it without blinking an eye."
"It's just become a form of institutionalized wage theft," he said Wednesday in a conference call with reporters. Glatt has an MBA from Case Western Reserve University and said he is currently studying law at Georgetown University Law Center.
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