Federal Court Confirms Unpaid Internships Are Illegal

In a ruling last week, a federal judge in New York confirmed what has long been predicted on this website (see here and here):  that unpaid internships that are not provided for educational course credit, and that are not otherwise designed primarily to benefit the intern, are illegal.  Thus, production assistants who worked as unpaid interns on a film for Fox Searchlight Pictures are entitled to payment of wages (including any earned overtime) because the work was not performed in connection with an educational program.  The opportunity to put the internship on one’s resume; make connections within the industry; and generally use that experience to perhaps obtain other work within the industry was not a sufficient justification for requiring the interns to work unpaid.

This ruling is likely to trigger numerous other lawsuits by unpaid interns around the country.  It also calls into question the legality of the common practice of offering unpaid summer internships to college students.

If you are an employer, either pay your interns or make sure that you can demonstrate that the work the interns are performing is for their educational benefit; that the interns are not replacing paid employees; and that the interns are not performing the work with the expectation that they will receive an offer of paid employment at the conclusion of the internship (suggesting that they are actually unpaid probationary employees and not interns).  Put the agreement with the intern in writing and have the intern sign it, to make sure there is no misunderstanding.

If you are an intern, or are considering accepting an internship, investigate whether the unpaid work will really offer a meaningful educational opportunity before you accept.

And regardless of whether you are an employer or an intern, talk to an attorney to make sure that you understand your rights and obligations before you proceed.  An employee can’t waive a violation of the Fair Labor Standards Act, and a violation can be expensive for an employer.

The analysis set forth in this article is provided for general understanding only and should not be considered legal advice.  Counsel should be consulted regarding the proper classification and treatment of interns.

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