The Second U.S. Circuit Court of Appeals recently ruled that a lower court made a mistake when it decided that Fox Searchlight Pictures violated employment law by having unpaid production interns.
In 2013, a federal judge ruled that the unpaid interns who filed the lawsuit should have been considered "employees" and paid wages. He argued that the menial and non-educational aspects of the interns’ jobs, which involved answering phones and taking lunch orders, meant that they had to be compensated under the Fair Labor Standards Act.
According to the Fair Labor Standards Act, there are six criteria that must apply for an unpaid internship to be considered legal:
- The internship has aspects that are similar to training that would be given in an educational aspect.
- The internship benefits the intern.
- The intern does not replace pre-existing employees, but is rather supervised by them.
- The employer does not gain an immediate advantage from the intern’s activities.
- The intern is not guaranteed a job at the end of the internship.
- Both the intern and the employee understand that the intern will not be paid.
Because the interns’ activities had been immediately beneficial to Fox Searchlight, the judge ruled that the unpaid internships were illegal
The Court’s decision was considered a major victory in the fight for intern rights, and seemed to signal the beginning of the end for unpaid internships. However, the ruling was reversed on July 2nd
, when the Second Circuit asserted that the question the Court faced was not whether the employer benefited from an intern’s work, but rather “whether the intern or the employer is the primary beneficiary of the relationship.”
"Applying these considerations requires weighing and balancing all of the circumstances,” the Court wrote. It stressed that determining whether an intern should be paid is “a highly individualized inquiry.”
What does this decision mean for unpaid interns?
The Second Circuit’s ruling may prove a setback for future internship wage disputes, as it allows employers greater leeway to legally use unpaid interns. As long as an employer can prove that it benefits less from the relationship than the intern, it does not have to pay him or her.
Another challenge the decision may pose to unpaid interns is that it suggests that they must file lawsuits one by one against their employers. This may discourage interns from doing so in the future.
Fortunately, the suit is being sent back to the lower court, which may still find that the interns should have gotten wages under the new guidelines.