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Unpaid "internships" are illegal

A common labor violation in California is the use of unpaid "interns," especially in the entertainment industry. The issue is that every employee must make the minimum wage, and employers cannot get around this by calling the work "volunteer" work or an "internship." Of course, bona fide volunteer work need not be paid, but this applies to things like helping the Red Cross out during a flood, not taking your bosses suit to the dry cleaner.

The U.S. Department of Labor has outlined a list of criteria that ALL must be met in order for an internship to be unpaid.

(1) The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
(2) The training is for the benefit of the trainee;
(3) The trainees do not displace regular employees, but work under close observation;
(4) The employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion the employer’s operations may actually be impeded;
(5) The trainees are not necessarily entitled to a job at the completion of the training period; and
(6) The employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.

Recent Developments

Although illegal internships have been around for decades, it is only now that individuals are suing to protect their rights. In the recent case of Glatt v. Fox Searchlight Pictures, Inc., a group of unpaid interns who worked on the film Black Swan (starring Natalie Portman), sued for unpaid minimum wage. The film production companies argued that the individuals were "trainees" who were receiving a valuable educational experience and were thus not entitled to wages. The Court disagreed and instead applied the same test as is listed above. A complete copy of the decision is here. The relevant discussion of what an illegal internship is starts on page 19.

The Court noted that the only exception for trainees is when NO BENEFIT AT ALL is provided to the employer. Thus it is not a balancing test of whether the "internship" is really good for the individual. If the company receives ANY immediate benefit, then the employee must be paid. In analyzing past internship cases, the Court noted that "The Supreme Court did not weigh the benefits to the trainees against those of the [company], but relied on findings that the training program served only the trainees." (See page 21 of the opinion).

Ultimately, the Court found that the "interns" were not "interns" but rather employees. Noting that the "training" providedincluded routine items such as"how [the company] watermarked scripts or how the photocopier or coffee maker operated." (See page 23). Although the company argued that the "interns" received such benefits as "resume listings, job references, and an understanding of how a production office works," these were the same benefits that any employee working in the office would receive and the key test is rather whether the company benefited from their work. (Page 24).

The Court also discounted the fact that the "interns" agreed not be be paid any money. The court noted that the "[the interns] understood they would not be paid. But this factor adds little because the FLSA [minimum wage and overtime law] does not allow employees to waive their entitlement to wages." (Page 25).

The Court also certified a class action so that various other "interns" used by these production companies could also get paid.

Since this case, a number of other interns have also sued, including interns at Conde Nast. If you worked as a unpaid intern within California any time during the last 4 years, please contact me to see if you are entitled to be paid for your work.