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Court Rules “Black Swan” Interns Must Be Paid; Certifies Class Action

For decades, the entertainment, media and fashion industries have relied heavily on unpaid interns to handle mundane daily work that supports the core business efforts. In exchange for some long weeks of making deliveries, fetching coffee, filing and other menial tasks, the interns walk away with industry contacts, impressive resumes and possibly college credit. The television productions, magazines and design houses, on the other hand, kept their costs down by using free labor for which they otherwise would have had to pay. Since the Great Recession, with diminished job opportunities in these sectors, former interns have been more assertive about their rights under federal and state law, filing suits against media and entertainment studios and production companies for wage violations.

In a decision handed down today in the Southern District of New York, Judge William Pauley largely found for three of four plaintiff interns who brought claims against Fox Searchlight Pictures and Fox Entertainment Group for violation of the Fair Labor Standards Act and New York Labor Law by failing to pay required wages for work they performed while putatively working as unpaid interns.

Two of the plaintiffs in Glatt v. Fox Searchlight Pictures, Inc. worked for a production company that was responsible only for the production of the film “Black Swan.” After examining Searchlight’s intern policies for five different films from the relevant time period, the Court found that while each film was produced by a separate corporate entity, the entities’ agreements with Searchlight gave Searchlight the power to hire and fire personnel and to supervise the entities’ business activities. Searchlight’s power to fire personnel was sufficient to give it “control” over the interns so as to be their employer under the FLSA and New York law. The Court also found that Searchlight had the power to determine work schedules and conditions, to determine the method and rate of payment for employees, and that it maintained employment records. All of these factors demonstrated that Searchlight had formal control over the interns.

The Court next found that, reviewing the totality of relevant factors, Searchlight had functional control over the interns and was, thus, a joint employer of the interns along with the individual production company.

Using the Department of Labor’s longstanding six factor test for permissible unpaid internships for for-profit companies, the Court found that two of the interns working on “Black Swan” were improperly denied wages. The Court focused on the fact that the interns – who performed menial tasks such as photocopying, drafting cover letters, fetching coffee, making deliveries and other administrative duties – displaced paid workers. Testimony from Searchlight revealed that when one intern cut back his schedule, another intern was hired to pick up the slack, and that if another intern was not available, Searchlight would have had to hire a paid production assistant. The work performed by the interns was for the company’s benefit, not the interns’, requiring payment under both federal and state law.

Regarding class action certification, the Court found that the claimed labor law violations by Fox were sufficiently numerous, involve common questions of fact or law, involve plaintiffs whose claims are typical of the class, and involve a class representative whose claims adequately represent the class.

The claims for violation of New York’s Labor Law were certified and the FLSA claims were conditionally certified as class actions. An appeal to the Second Circuit is sure to follow.

Anecdotal evidence in the affected industries indicates that perceptive companies in fashion, media and entertainment have been moving to clean up or dismantle their unpaid internship programs to ensure compliance with the Department of Labor’s guidelines. Regardless of the end result of today’s decision, that trend will likely accelerate.

The complete decision can be found here:

http://www.nysd.uscourts.gov/cases/show.php?db=special&id=300

 

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