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Compensaton and Benefits

Still Willing To Have Unpaid Interns?

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We have repeatedly cautioned that employers who are prepared to take on unpaid interns should enter into these arrangements with their eyes fully open.  New developments emphasize this yet again.

The Fox Searchlight Litigation

We reported in March 2012 that Fox Searchlight Pictures had been sued under the federal Fair Labor Standards Act and New York law by unpaid interns who were claiming to be due wages and other sums.  The court has now ruled (link to decision below) that at least two of these individuals were indeed "employees" for purposes of the FLSA and state law.

The judge concluded among other things that these interns:

♦   Received nothing approximating the education they would receive in an academic setting or in a vocational school;

♦   Received no benefits from the relationship other than those that were "incidental to working in the office like any other employee and were not the result of internships intentionally structured to benefit them"; and

♦   Performed "essential" unpaid work that would otherwise have been done by paid employees.

Furthermore, the court was not swayed by the facts that:

♦   The interns were not, and did not think themselves to be, entitled to a job at the conclusion of their internships; and

♦   The interns understood that they would not be paid for their activities.

It is noteworthy that the judge reached his decision in granting the interns' summary-judgment motion.  Essentially, he was saying that the answer is so clear as to leave no need for a jury trial.

And Yet Another High-Profile Lawsuit

Moreover, a former unpaid intern has now filed a federal-court lawsuit (link to copy below) against prominent fashion designer Norma Kamali and her companies.  The former intern alleges violations of both the FLSA and New York law.

One of the assertions is that her circumstances were "part of a broader trend where formerly entry level employees are being misclassified as unpaid 'interns' or 'apprentices' in an effort by employers to avoid paying [the required] wages . . .."  The intern asks for an unspecified award of minimum wages, overtime compensation, and other sums.

*    *    *

It has been clear for some time now that a new "hot issue" in wage-hour law is the employment status of unpaid interns.  The Fox Searchlight ruling is likely to spur even more claims of this kind.

One must wonder how much longer those who have been willing to provide unpaid internships will continue to do so in this environment.  We suspect that educational institutions, students, and others seeking these opportunities will find few of them available by next summer, if not before then.

Glatt v. Fox Searchlight Order.pdf (1.74 mb)

Van Rabenswaay v. Kamali.pdf (7.42 mb)

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BIOGRAPHY


John E. Thompson  is a partner of Fisher and Phillips LLP in the Atlanta office. His practice focuses on wage and hour law, emphasizing issues relating to minimum wage, overtime, timekeeping, and wage-payment requirements. He assists employers in preventive efforts designed to ensure compliance, and he handles both investigations conducted by government agencies and litigation in the wage and hour area. John has served as a Special Assistant Attorney General for wage-hour matters for the State of Georgia. He has also addressed wage-hour topics in presentations to numerous employer groups and in articles appearing in both human resources publications and industry journals. John is "AV" Peer Review Rated by Martindale-Hubbell and has been included in Georgia Super Lawyers. He has also been listed in The Best Lawyers in America since 2006 and in Chambers USA: America's Leading Business Lawyers since 2009. John is the editor of the firm's Wage & Hour Laws Blog.

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Growth in women's share of science, technology, engineering and mathematics (STEM) occupations declined to 27% in 2011from a high of 34% in 1990. While women make up nearly half of the workforce, they were 26% of the STEM workforce in 2011.

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