The 2nd Circuit Court of Appeals has remanded a prior victory by interns over Fox Searchlight back to a lower court, resetting the stakes and creating a new test for whether interns should be paid.
At issue is whether interns should be paid or not. While prior guidance from the Department of Labor in 2010 spelled out certain criteria, such as whether the internship displaces regular employees and whether the internship is comparable to experience that would be gained in an educational environment, to help make the determination, Judge Walker of the 2nd Circuit wrote about a test he calls the primary beneficiary test.
The test comprises of two factors: “First, it focuses on on what the intern receives in exchange for his work. Second, it also accords courts the flexibility to examine the economic reality as it exists between the intern and the employer.” Therefore, the stronger the imbalance in favor of what the employer can provide in non-monetary benefits such as experience and substitution of coursework to the intern, the weaker the argument for the intern to be paid.
Despite a flurry of lawsuits against other major studios (including Viacom, Lionsgate, ICM Partners, and NBCUniversal) that have ended in multi-million dollar settlements for interns, Fox continues to fight against this lawsuit. The case has been handed back to the lower court, and although the plaintiffs Alex Footman and Eric Glatt still have a strong chance of winning this case, the new test raises the bars for interns who fight to get paid.
Where is the line between paid and unpaid interns? Are unpaid interns actually unpaid employees? Will this case stifle further class action lawsuits from interns against their employers?
Note of full disclosure: This webpage was written and created by paid interns
Dominic Patten, Legal Editor and writer at Deadline, a news site covering Hollywood and the entertainment industry. His latest piece looks at today’s decision.
Eric Glatt, former intern for Fox Searchlight and one of two plaintiffs in the lawsuit.
Maurice Pianko, Director and lead attorney for Intern Justice, a website that gives legal information and services to unpaid workers.
Paul DeCamp, Partner with the Jackson Lewis law firm based in Washington, D.C.; he previously ran the Wage & Hour Division of the Department of Labor.