The Second Circuit U.S. Court of Appeals (jurisdiction in Connecticut, New York and Vermont) overturned a lower court decision that Fox Searchlight Pictures had improperly classified former workers as unpaid interns instead of employees.

In 2011, two unpaid interns on the movie Black Swan sued Fox claiming that they should’ve been paid as employees.  Judge William H. Pauley III of Federal District Court agreed, citing the U.S. Labor Department’s six criteria.  Last week, Second Circuit disagreed citing that the Labor Department’s criteria were both out of date and not binding on federal courts.  Judge John M. Walker Jr. of the Second Circuit wrote that whether or not someone should be an unpaid intern rests on a series of facts and circumstances based on the Primary Beneficiary Test:

  1. The intern and the employer clearly understand that there is no expectation of compensation.
  2. The internship provides training that would be similar to that given in an educational environment (including clinical and other hands-on training provided at educational institutions).
  3. The internship is tied to the intern’s formal education program by integrated coursework or academic credit conferred.
  4. The internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The internship’s duration is limited to the period during which the internship provides beneficial learning to the intern.
  6. The intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The intern and the employer understand that there is no entitlement to a paid job at the internship’s conclusion.

Most folks break into the Entertainment and Sports Industries via unpaid internships.  Many of our clients hire unpaid interns to work on their productions.  I was on a film set a couple of times – although you have to be very quiet, there is so much going on behind the scenes and there is so much one can learn by just being there.  I think that this presents a valuable opportunity for someone who wants to break into the industry.

But, on the other hand, in their lawsuit, the two unpaid interns claimed that their duties included copying documents, maintaining takeout menus and taking out trash.  It’s not clear if they had time to hang / shadow crew members (thereby learning the craft).

If you’re not sure whether or not to bring unpaid interns onto your production, we strongly urge you to contact legal counsel (we can give you referrals).

Is an unpaid internship valuable or do you consider this as free / “slave” labor?  What are your thoughts?