As we enter the height of the summer internship season, employers should take note of recent rulings and settlements arising from claims by unpaid interns and consider reviewing their internship programs to ensure compliance with applicable wage and hour laws. In June 2013, the United States District Court for the Southern District of New York ruled in Glatt v. Fox Searchlight Pictures, Inc. that the company violated federal and state laws by misclassifying production interns as "trainees." The Glatt court concluded that the interns, who worked on the film "Black Swan," were regular "employees" who were owed minimum wage and overtime pay. Additionally, a New York state court recently approved a $250,000 settlement of a class action lawsuit brought on behalf of a group of unpaid interns that had similarly accused their employer of misclassifying them and failing to pay them minimum wage.

In assessing whether an unpaid internship or training program is legally permissible, employers should consider the following criteria promulgated by the United States Department of Labor's Wage and Hour Division applicable to for-profit employers:

  • The internship must be similar to training which would be given in an educational environment;
  • The internship must be for the benefit of the intern;
  • The intern must not displace regular employees, but work under close supervision of existing staff;
  • The employer must not derive any immediate advantage from the activities of the intern;
  • The intern will not be entitled to a job at the conclusion of the internship; and
  • The employer and the intern both understand that the intern is not entitled to wages for time spent in the internship.