Employers with unpaid internship programs may need to reevaluate their policies after an unprecedented ruling from the U.S. District Court for the Southern District of New York. In Glatt v. Fox Searchlight Pictures Inc., the court held that unpaid interns who worked on the production of the movie Black Swan were employees subject to the protections of the Federal Labor Standards Act (FLSA) [PDF] and entitled to back pay. The court also certified a class action on the interns’ claims for violation of state labor statutes and conditionally certified a class action on the FLSA claims.

 

Searchlight Is a Joint Employer under the FLSA
The court first considered whether Fox Searchlight Pictures (Searchlight) was an employer of the interns, who were hired by related entities. “Employer” has a much broader definition under the FLSA than under traditional agency law. The FLSA defines “employ” as “to suffer or permit work,” and joint employers can also be held liable.

 

After applying the formal control test and the functional control test, the court found that Searchlight exercised formal and functional control over the interns and deemed it a joint employer. It cited Searchlight’s power to hire and fire interns and their supervisors, supervise and control work schedules, and determine the method of employment, as well as its maintenance of employment records for the interns and the fact that the interns worked exclusively on Black Swan.

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