Fox Offers Powerful Lesson to Employers Hiring Interns This Summer

Fox Entertainment Group recently learned the hard way that interns don’t necessarily mean “free” labor.  A New York federal judge recently certified a class-action lawsuit under the Fair Labor Standards Act (FLSA).

The court found that although the two plaintiffs were treated as unpaid interns, Fox failed to satisfy the necessary legal test for treating them as such. As we have previously discussed on this Business Law Blog, Internships in the “for-profit” private sector will most often be viewed as employment, unless the following Department of Labor test is satisfied.

• The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
• The internship experience is for the benefit of the intern;
• The intern does not displace regular employees, but works under close supervision of existing staff;
• 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;
• The intern is not necessarily entitled to a job at the conclusion of the internship; and
• The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the law’s minimum wage and overtime provisions do not apply to the intern. However, in this case, the court determined that the plaintiffs should have been classified as employees.

“They worked as paid employees work, providing an immediate advantage to their employer and performed low-level tasks not requiring specialized training,” U.S. District Judge William Pauley wrote.

“The benefits they may have received–such as the 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.”

If you have any questions about this cases or would like to discuss the legal issues involved, please contact me, Christine Vanek, or the Scarinci Hollenbeck attorney with whom you work.