Is this the end of unpaid internships?

A judge rules that a movie studio should pay interns working on 'Black Swan.' Other recession-era interns are also filing suit.

By Jason Notte Jun 12, 2013 4:25PM
© Fox SearchlightNo, Fox Searchlight (NWS), taking lunch orders for Natalie Portman and Mila Kunis isn't its own reward.

In a decision that could have huge consequences for the film industry and other businesses that benefit from unpaid internships, a federal judge in Manhattan ruled on Tuesday that 20th Century Fox subsidiary Fox Searchlight violated minimum-wage laws by not paying two production interns for their work on the film "Black Swan," The New York Times reports.

Eric Glatt and Alexander Footman sued Fox Searchlight in September 2011, claiming they did the work of paid employees without receiving any compensation. The suit claimed they took lunch orders, answered phones, arranged other employees’ travel plans, tracked purchase orders, took out the trash and assembled office furniture. The judge noted that those tasks held no educational value and benefited only the studio.

"Undoubtedly Mr. Glatt and Mr. Footman received some benefits from their internships, such as résumé listings, job references and an understanding of how a production office works," Judge William Pauley wrote. "But those benefits were incidental to working in the office like any other employees and were not the result of internships intentionally structured to benefit them."

The judge pointed to rules set by the Department of Labor that say unpaid internships should not be to the immediate advantage of the employer, that their work must be similar to vocational training given in an educational environment, and that the experience must be for the benefit of the intern and the intern’s work must not displace that of regular employees.

While the studio could make the argument that Glatt, who has an MBA from Case Western Reserve University, may have benefited from the insider's view of a studio's business workings, the lack of vocational training and the clear substitution of paid labor for unpaid interns proved Fox's undoing.

Pauley even went so far as to suggest that receiving academic credit was of little importance in determining whether interns should be paid. Intern Bridge, a research firm, estimates that undergraduates work in more than 1 million internships a year, half of which are unpaid.

While that was standard procedure pre-recession, unpaid interns in a weak job market have been far less patient with the process. In February 2012, a former Harper’s Bazaar intern sued Hearst Magazines, saying she regularly clocked 40 to 55 hours a week without being paid. Her claim is now a class-action suit that includes unpaid interns who worked in the company’s magazines division since February 2009.

This February, an unpaid intern sued Elite Model Management for $50 million. After a lawsuit brought by unpaid interns, PBS host Charlie Rose and his production company announced last December that they would pay back wages of $1,100 each to as many as 189 interns.

More on moneyNOW

Jun 12, 2013 6:42PM
The work these people were doing were clearly displacing the jobs of executive assistants and janitorial staff. Given the law and how it is written these kids were absolutely in the right. You may disagree for various reasons but 20th Century Fox clearly violated the law as it is written.
Jun 12, 2013 5:40PM
I think 20th Century Fox can afford to pay minimum wage.
Jun 12, 2013 6:50PM
If I am a civil engineer student I should not be stuck with a labor crew sweeping and cleaning port 'o' johns during my summer internship. This is not the notion of pay your dues, it is getting free labor.   If I was majoring in waste disposal in college, and interned at a trash company like WM or BFI, then yes cleaning up trash and such would be paying your dues. 
Jun 12, 2013 6:45PM

Interns should be paid. Now they are just the cheapest of labor a company can find,

Jun 12, 2013 6:43PM
maybe it depends on whether you are still in college. my son had an unpaid internship, that counted for most of his last semester's worth of credit. he thought it was worth doing, but would probably have thought otherwise if he was out of school, and expected to work for nothing.
Jun 12, 2013 7:37PM
I did a paid internship and it was horrible. I was basically cheap labor. Whenever the Agency lost a full-time employe, they will replace him with two part-time interns who will work for $10 an hour or replace him with a temporary worker. Yea, some paid internships are really good filled with a lot of meaningful work. However, a majority of them are a waste of time ( I know from experience.). Most of the time an intern will sit in a cubicle all day and do menial tasks like data entry, verifying and updating numbers in a spreadsheet, and due other menial tasks like making copies, shredding documents, etc.  That is what I did like 95% of the time. It got to a point when coming into work was a waste of time. Managers were too busy and didn't have the patience to explain and teach me things. Plus, whenever I made mistakes, they would get upset and frustrated with me.
Jun 13, 2013 12:21AM
Great decision by Judge Pauley.  It is about time college students and graduates get some pay for summer internships, which are not taken for college course credit.  They need to earn money in the summer to save toward tuition.  One wouldn't expect high school graduates to work for free after earning their diplomas just to get work experience.  Couldn't you see the expression on your teenager when you tell them that since they have graduated they now have to take unpaid work just to eventually get to a paying job?  On the otherhand, internships which are done as a requirement for a degree in a particular area, during the school term, will probably remain mostly unpaid, but for these experiences faculty are usually involved in the expectations and goals for the students, and students can go to faculty when they are not being given learning experiences. 
Jun 13, 2013 9:16AM
Interns without pay are less than slaves, they don't get food or housing.  Not only is it illegal, it is egregious inhumane, and pets are treated better.
Jun 13, 2013 9:18AM
all these companies are trying to get something for nothing not even a stipend for million dollar corporations
Jun 13, 2013 9:38AM

Unpaid internships are great if you don't have any bills, enjoy working for nothing with no guarantee of paid future employment and are fine with being taken advantage of.  EXPERIENCE IS NOT COMPENSATION.  No thanks.

Jun 13, 2013 9:36AM

Making someone work without pay is illegal. The only reason unpaid internships aren't illegal is because the intern isn't being forced to work that internship and the "pay" is supposed to come from the intern getting a hands on education about the field they are working in, which is hopefully the field they will want to work in. However, emptying trash cans, fetching coffee and ordering lunch for people does not give them this hands on insight into the future career they're supposed to be learning about.


Internships should be like work placement programs arranged by schools in which you report to a certain authority whose job is to make sure your internship is worthwhile and forces you to make a record of how the internship gave you meaningful insight into your future career choice, whether you learned anything worthwhile during your internship, how your employer and fellow employees treated you, when you asked questions about specific processes around the workplace did they get answered properly etc. and similarly, your employer will make a report of your progress, what exactly your employer had you do and how it pertains to the career you want to work in, what was your attitude around the workplace, would they consider hiring you as a paid employee once your internship is over, etc. Because the only way unpaid internships will be worthwhile is if employers are forced to make it worthwhile for their interns and not use interns as free/cheap labour.

Jun 13, 2013 10:01AM
I think unpaid internships should be declared illegal. This is just a chance to get some work for nothing. I know that any place that I ever worked paid the interns.

Jun 13, 2013 9:13AM
With today's students graduating with such high debt, how can they afford to intern, ie. work for free?  Even working for minimum wage is a sacrifice.  Unpaid internships will suffer during this economy just as volunteerism has.  I work full time, but my wages are so low that I barely scrape by.  Unfortunately, this means I don't have money for gas to travel and volunteer as I had in the past.
Jun 13, 2013 10:11AM

This ruling will affect more than large corporations that can afford to pay in many peoples opinions.  It will affect design firms large and small all across the nation and will affect the ability of many young designers and artists to get the experience they need.


I am in the design profession, owning a small office and I will not hire an intern without paying them for their time.  I do not hire them as personal attendants, but as an employee with a full work station for their use. Rarely if ever get enough productivity from an intern to cover the cost to employ them.  In actuality I am employing them to allow them to get the experience they will need to be hired in the future.  Why? I feel it is payback for the firms that hired me when I was getting started.  I do get gratification as they all come back years later to say thank you when they realize the value of the experience, and realize that they were not as productive as they thought they were at the time.


Because we pay, and the expensed of having an open workstation with the hardware and software required, I can only provide internships when cash flow is good and we have turnover in staff, freeing up a work station.  If I were to bring in a summer intern this summer (had 10 requests), just providing the work station would cost $12,000-18,000 which would sit unused after they went back to school.  We have not had an intern since 2008 due to the economy.  I have had many requests from students wanting the experience for their resume in order to get their first "real" job after school.  Many have offered to work for free. 


While these offers are tempting and many firms do it, I choose not to.   While helping students get experience is important to me, I have made the choice to not bring someone on board that I can not provide a rich experience for and pay them out of my pocket when they are working. 


However any thoughts of bringing in an intern in who begs for the experience without pay will be a thing of the past for many firms with this ruling.  I know many who have worked for free or limited salary just for the opportunity to gain the experience when the economy was tight in the 80's and 90's and IS was what got them their first "real job" once the economy improved.  Good luck to those who need the experience to get started in their professions as part of the learning curve required outside of the classroom, I hope you can find it after this ruling. 

Jun 13, 2013 10:09AM
prime example of corporate America if they had it their way they would pay illegals to work for them ..wait they do they just ship the company over seas and pay pennies for work done
Jun 13, 2013 10:46AM
My daughters had better jobs out of high school, than they did get after getting their B A degrees.I refused to let them be extorted by big banks while in college, with working for nothing . Grinding students for free ,while those at the top steal all the profits. 
Jun 13, 2013 10:56AM
Wouldn't a paid internship just be called a job?
Jun 13, 2013 9:19AM
Hahhahahhaha.  Going to college to run up debt and get a job that pays nothing.
Jun 13, 2013 9:45AM
I guess this is the sign of the times we're living in...The new world order, and economy. I worked thirty plus yrs. in local government. Made a living wage, had benies. Now I can only find part time work in retail being paid min. wage with no benies...Lucky I have a pension, and very little debt...And my kids have good jobs, but they're struggling too....
Jun 16, 2013 10:46PM
My friend told me today that her boss of the 9 to 5 job she's been working for two years told her that the company couldn't pay her anymore, but they'd keep her on as an unpaid intern. She quit today and all her coworkers applauded her as she walked out of the building.
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