It’s the End of Internships as We Know It: Fox Searchlight Ordered to Pay Interns

In a groundbreaking employment case reported by NBC News, a Manhattan Federal District Court Judge ruled in favor of two production interns who worked on the blockbuster film “Black Swan." The ruling comes after a great deal of controversy and concern by the greater human resource community over what constitutes paid vs. unpaid assignments. The judge ruled in favor of the plaintiffs because, “that these internships did not foster an educational environment and that the studio received the benefits of the work.

What does this mean for the business world?

While at first this may seem like a victory for interns everywhere, this could also spell trouble. Thousands of other companies that regularly use unpaid interns to take on normally paid tasks, will now be re-evaluating their internship programs to determine if they too will be required to pay interns at least the Federal Minimum wage. According to Intern Bridge’s 2011 National Internship and Co-op Study, nearly one million undergraduates provide their hard-work in internships every year. There has also been a surge in the number of paid and unpaid internships for adults who have been displaced from careers and need training in other industries.

How might this affect the job market?

For obvious reasons, this has multiple implications for businesses, which could negatively affect the market for those looking for internships this coming year. The plaintiffs’ lawyer in the Fox Searchlight case, Rachel Bien, stated that, “I think this decision will go far to discourage private companies from having unpaid internship programs.” Employers will need to closely examine their current unpaid internship programs to determine if they provide actual educational value or if they are merely a means for obtaining free labor.

What can interns expect in the near future?

As a result of this ruling, it is very possible that not only will companies be required to prove the learning and experience that each intern will get on their WH-205 forms, but interns will also have to carefully document their internship tasks too. Internships have been a widely accepted form of on-the-job vocation, while the participant companies have benefitted from extra hands on deck. However, the breadth of this experience could possibly be limited as employers must scrutinize internship programs to make sure there is no overlap between paid staff and unpaid intern duties.

Interns who are presently in roles that include basic tasks performed by other paid employees may decide to approach the personnel department for a review. In some cases, they too may be eligible for at least minimum wages or some form of internship compensation. However, there may not be companies willing to go this route, as a measure of cost savings. Instead, alternative means to obtain support may come in the form of 1099 independent contractors, temporary staffers, and adding more low pay, entry-level assignments. However, the demand for internships will not diminish, because job seekers are 70 percent more likely to get a job offer when they intern.

The actual affect this will have on the market as college students and career changers search for internships this season remains to be seen. We will report on this as we learn more about what’s trending in the job and intern scene.

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