As interns flood the summer work force once again, a federal judge in New York has just given them something to cheer about.
In an unprecedented ruling, U.S. District Judge William Pauley III in Manhattan found that unpaid interns at various Fox subsidiaries should be considered employees under 2010 guidelines drafted by the U.S. Department of Labor, entitling them to compensation under federal and state labor laws. Rejecting various defense arguments put forward by Fox’s lawyers at Proskauer Rose, Pauley granted certification of a class of interns seeking back pay.
The class isn’t large—probably between 100-150 interns, according to one of the lawyers involved. But the plaintiffs’ team at Outten & Golden hailed the decision as a major breakthrough. "This is the first case where there has been a ruling that establishes that unpaid interns are employees," said Outten’s Juno Turner. "This means that if interns are providing work of immediate benefit to employers where they are not receiving training other than what they’re learning on the job, then they’re entitled to wages."
The ruling follows a conflicting decision in the same district just last month. In that case, which was also brought by Outten & Golden, an intern is seeking back pay on behalf of a proposed class that theoretically includes thousands of past interns in the vast Hearst Corporation magazine empire. After conditionally certifying a collective FSLA action last summer, U.S. District Judge Harold Baer Jr., denied certification on May 8, finding that the interns, who held a variety of jobs, didn’t meet the higher bar for showing class commonality established by the U.S. Supreme Court in Dukes v Wal-Mart. Baer also found that Hearst was within its rights to bring in the named plaintiff, Xuedan Wang, without pay under a "trainee" exception to the Fair Labor Standards Act.
Both cases look ripe for appeal. The U.S. Court of Appeals for the Second Circuit has never ruled on the precise issue of whether modern-day interns are to be considered employees. The last major decision on the issue came in 1947, when the Supreme Court ruled in Walling v. Portland Terminal Co. that prospective brakemen who took a weeklong unpaid training were not employees under the law, because the company received no immediate benefit from the trainees’ work. Both judges in the intern cases cited Walling to come to different conclusions.
Both judges also cited Dukes. But in contrast to Baer, Pauley found that plaintiffs had satisfied the commonality requirement by providing evidence that Fox knew it had benefited from the unpaid labor. One piece of evidence noted that Fox Searchlight had doubled the use of interns after overtime pay and temporary employees were scaled back. In another email, Searchlight’s internship recruiter said that interns were providing benefits to the company and that "we really should pay them" under Department of Labor guidelines.
Outten & Golden, which is representing the plaintiff interns in both cases, has already sought leave to appeal the Hearst decision. Rachel Bien is leading the charge at Outten & Golden in both cases. Fox’s lawyer, Elise Bloom at Proskauer Rose, didn’t respond to a request for comment. (Hearst is relying on an in-house team as well as Proskauer’s Mark Batten in the case before Judge Baer.)
Whatever happens on appeal, there are at least two other new federal cases in the wings. On May 7, a former unpaid intern alleged in a proposed federal class action in Pittsburgh that the Pittsburgh Power arena football team misuses unpaid interns. And in February, a former unpaid intern at Elite Model Management Corp. filed a proposed $50 million class action claiming that the agency also violated state and federal wage laws.
Lawyers in the Elite case were due to file a motion for conditional certification as an FSLA collective action by June 24. The plaintiff, Dajia Davenport, is represented by Steven Wittels of the Law Offices of Steven L. Wittels. The modeling agency has tapped Gary Friedman at Weil, Gotshal & Manges.