The Second Circuit Doubles Down on Exploitative Internships in the “Black Swan” Intern Case, Fabricating New Labor Rules While Rejecting U.S. Supreme Court Precedent.
Last Thursday the Second Circuit of the United States Court of Appeals vacated a Federal District Court’s 2013 ruling that employers must derive “no immediate advantage from the activities of the intern.” This latest ruling in the Glatt et al. v. Fox Searchlight Pictures case, known as the “Black Swan” intern case, weighs heavily in favor of employers.
The Court disregarded the six-point test on legal internships set out by the United States Department of Labor in 2010, rejected United States Supreme Court precedent from a relevant 1947 case, Walling v. Portland Terminal Co., promulgated an entirely new set of legal rules based on a so-called “primary beneficiary test,” and raised the bar required to certify a class of workers, potentially closing the door on an effective legal strategy for exploited interns. Its misguided focus on “educational benefits” continues to perpetuate the exploitation of free student labor, exempting employers from any responsibility of payment as long as students are working for academic credit.
Intern Labor Rights sees the Second Circuit’s ruling as a direct attack on the central purpose of Fair Labor Standards Act (FSLA): that people must be paid at least a minimum wage for the work they do.
In a recent article published in Forbes Magazine, Boston University labor law professor Michael Harper stated that the reasoning behind the appeals court’s seven new criteria for evaluating unpaid internships “is made out of whole cloth.” Suffolk University law professor David Yamada concurred stating “All the factors they drew up were really without legal authority.” Yamada believes that the Second Circuit judges “apparently decided to invent something new here, which is surprising at the appellate level.”
Intern Labor Rights believes that the Second Circuit’s seven new criteria are arbitrary and fabricated to shift the burden of evidence in cases of exploitative internships away from employers and onto the backs of student workers. As Yamada stated in his recent blogpost on the ruling, “In practical terms, the decision invites private employers and universities to collaborate on schemes that (1) create unpaid internships; and (2) charge students tuition for the “privilege” of doing unpaid work.”
The Appeals Court stated “As our previous discussion of the proper test indicates, the question of an intern’s employment status is a highly individualized inquiry,” using the haphazard nature of existing internship programs to deny class certification. This ruling significantly raised the bar for class certification, arguing that each individual intern is essentially on their own, undermining the very notion of how class action functions in our legal system. The rejection also rewards employers for creating poorly run training programs that lack the unified standards required for a program to be considered part of an intern’s “formal education program” – one of the new criteria promulgated by the court.
The Court’s ruling works to legitimize unpaid internships “for school credit” as an alternative to waged compensation. This absurd, yet common practice has convinced many young people that paying thousands of dollars to universities somehow absolves for-profit corporations of their obligation to compensate for entry-level work. In fact, these collaborations between universities and employers not only extract more money from students by way of academic credits, but simultaneously avoid paying instructors, as they conveniently assume the student is receiving ‘training…similar to that which would be given in an educational environment” at the workplace. All this is taking place at a time when national student debt has reached $1.2 trillion.
Intern Labor Rights stands in solidarity with Eric Glatt, Alexander Footman and the other plaintiffs in this case, who are some of the first interns to hold mega-corporations such as Fox Searchlight Pictures accountable for their exploitative practices. We would like to remind everyone that “Black Swan” earned over 300 million dollars while Glatt and Footman were paid nothing. We continue to stand by them and all unpaid interns as they fight through all legal channels available.
We also see a few silver linings.
First of all, the Second Circuit decision has now sent the Fox Searchlight case back to the District Court. Despite the difficulty of certifying a class of interns, there is a strong possibility the plaintiffs will ultimately prevail in their specific case. Among other implications, the new standards appear to suggest that for unpaid internships to comply with the federal Fair Labor Standards Act, they need to be well integrated into a formal educational program—a condition anyone familiar with the internship economy knows is rarely the case. While we firmly believe that all internships, including student-internships, should be paid whenever employers benefit from interns’ work, this ruling implies that thousands of unpaid internships held by college graduates are not in compliance with the law, including Glatt’s and Footman’s.
Secondly, the publicity this case has received has already sparked numerous lawsuits, resulting in millions of dollars in out-of-court settlements being allocated to former interns. These are major victories for student workers. Together they caused a sea change toward paid internships across multiple industries, notably entertainment and journalism, along with some major arts institutions. It will be quite difficult for those employers to revert back to unpaid internships and to justify the “extent to which the intern’s work complements, rather than displaces, the work of paid employees.”
Finally, Intern Labor Rights recognizes that this ruling demonstrates the practical limits of working solely within the legal system to achieve justice for student workers. By removing many reasonable legal options from the list of steps available for student workers seeking redress from exploitative internships, the Second Circuit judges have booted the fight back into the realm of politics. That’s where the battle should be. We hereby call out the corporate greed that seeks to control our education and exploit a new generation of workers. We do not need the permission of judges, politicians, bosses, deans, or academic advisors to demand respect and fair compensation. Our voices will be heard loud and clear.
For details and commentaries on the Second Circuit ruling, see:
13-4478-cv (L) Glatt et al. v. Fox Searchlight Pictures, Inc. et al.
“Why The Second Circuit Made A Flawed Decision In Upholding Unpaid Internships,” Susan Adams, Forbes Magazine, July 7, 2015.
“Employers Have Greater Leeway on Unpaid Internships, Court Rules,” Noam Scheiber, New York Times, July 2, 2015.
“Circuit Adopts Employer-Backed Intern Pay Standard,” Ben Bedell, New York Law Journal, July 6, 2015 (Registration Required).
“Interns, Victimized Yet Again,” Ross Perlin, New York times, July 3, 2015.
“U.S. Appeals Court deals setback to interns seeking to be paid for their work,” David Yamada, Minding the Workplace, July 2, 2015.