The U.S. 2nd Circuit Court of Appeals in New York last Thursday (7/2) vacated a 2013 ruling by a federal judge, thus giving new life to the legal viability of unpaid internships in the media/entertainment industry. Over the past couple of years, these internships have been under assault with litigation yielding monetary compensation for former unpaid interns. Additionally during this same time period, a number of studios and other companies have changed their policies and started paying interns.
However, last week’s appellate court decision could impact the marketplace, perhaps stemming the tide of litigation initiated by ex-interns seeking back pay and damages.
First, looking back on the original decision, U.S. District Court Judge William Pauley in June 2013 sided with two unpaid intern plaintiffs who contended they were entitled to compensation for their work on the Fox Searchlight feature Black Swan. Judge Pauley ruled that the interns, Eric Glatt and Alex Footman, took on work that Fox Searchlight would have otherwise had to give to paid employees to perform.
To support his ruling, Pauley cited the Department of Labor’s six legal criteria for unpaid internships, including guidelines specifying that these interns not displace regular employees and that the unpaid interns be assigned duties and tasks “similar to training which would be given in an educational environment.”
Pauley’s verdict sparked a wave of lawsuits from other ex-interns against such companies as NBCUniversal, Viacom and Warner Music.
Now, though, a potential chilling effect on the prospects for such future litigation comes from 2nd Circuit Court of Appeals Judge John Walker whose ruling vacates not only Judge Pauley’s District Court decision but also the original class-action certification granted along with it. Walker ruled that the Department of Labor’s criteria for unpaid internship are too rigid to apply to Fox Searchlight and its former interns. Walker said a fairer litmus test would be to determine whether the intern or the employer is the primary beneficiary of the relationship. Plus Judge Walker noted that an unpaid internship gains further validity when it is tied to a formal educational curriculum through integrated coursework or the receipt of academic credit.
Imposing less stringent criteria than those cited by Judge Pauley in his 2013 decision, the appellate court has now remanded the case back to the U.S. District Court for reconsideration and further deliberation. Glatt and Footman originally sued Fox Searchlight in 2011, claiming the company violated the Fair Labor Standards Act as related to their employment during the making of Black Swan, a lauded film which went on to win the Oscar for Best Leading Actress (Natalie Portman) in 2011 and was nominated in four other categories–Best Motion Picture, Best Achievement in Directing (Darren Aronofsky), Best Cinematography (Matthew Libatique) and Best Editing (Andrew Weisblum).
