Black Swan Event: The Beginning of the End of Unpaid Internships

  • Share
  • Read Later

Two years ago, they didn’t stand a chance.

Two days ago, when I heard they had won, I dug the e-mail out of my inbox: “I’ve been glad to read about your upcoming book, Intern Nation. I recently worked as one of approximately 20 illegally unpaid interns for the Oscar-nominated film Black Swan.”

The e-mail was from Eric Glatt, a 41-year-old New Yorker who admitted that he fell “outside the norm” for an intern, with his two Master’s degrees and substantial career experience under his belt. Like many older interns in today’s labor market, he was transitioning careers and had no idea how brutal it would be. In 2010, he worked hundreds of hours on the set of Black Swan, doing the essential work of drawing up purchase orders, making spreadsheets, running errands — and earning nothing for his work, not even the minimum wage of $7.25 an hour. There was no training. There were no full-time jobs waiting at the end of the rainbow. “Win-win” was an empty platitude. The reality was that Glatt’s “employer” was getting something for nothing.

Black Swan went on to make over $300 million. Fox Searchlight Pictures, Glatt’s employer, is a subsidiary of Rupert Murdoch’s News Corp., with annual revenues around $35 billion. Learning afterward that his internship had been against the law, and that he was far from alone, Glatt e-mailed me to ask if I knew a lawyer who would take on his case. No intern had filed a case like this before, I told him, but I put him in touch with Adam Klein of the New York City firm Outten & Golden. (Just to be clear: I received no compensation for connecting them, and have no financial stake in the case.) Within a month, Glatt and fellow plaintiff Alex Footman had filed against Fox. Interns are used to being laughed at, but all of a sudden things were deadly serious.

(MORE: The Internship: A Google-centric Guide to a Google-centric Movie)

In the resulting lawsuit, the small amount of backpay at stake was secondary. The case was first and foremost a challenge to the ugly new culture of internships, a third to half of which are unpaid. It was a culture I knew firsthand, both from my own internship experience and from interviewing hundreds of interns for Intern Nation, published in 2011. Though a small minority of unpaid internships are legitimate and exemplary, the more accurate term for Glatt’s experience is wage theft, which affects millions of American workers every year. In fact, the Black Swan internship was in many ways typical both of the film industry and of broader economic realities. At their peak following the 2008 crash, unpaid internships were increasingly crowding out paid ones and replacing regular positions altogether, in the process turning the entry-level job into an endangered species. It was “a capitalist’s dream,” as sociologist Andrew Ross put it: free white collar labor made to seem almost entirely normal. This pay-to-play system was not only exploiting the interns, but also excluding the poor and working class from a whole range of fields and opportunities. Most people simply can’t afford to work for free, of course, and you just can’t pay the rent with on-the-job experience, CV-line items and letters of recommendation.

But most interns accept it as standard practice, however unfair — or else are afraid to stick their necks out. Indeed, many people told Glatt that his case was “career suicide.” But he went ahead anyway. “If you don’t come forward and speak up, you’re basically stuck,” he says. “It was nauseating to see how easily employers could get free labor just by slapping the title ‘internship’ on something.”

(MORE: 7 Ways to Get the Most Out of an Internship)

The decision rendered on Tuesday by Judge William H. Pauley in Manhattan’s Federal District Court fully vindicates Glatt and his fellow interns, proving that the law still holds. Most interns at for-profit companies are entitled to be paid minimum wage and overtime, and to receive the same workplace protections as other employees. Those rights date back to the Fair Labor Standards Act of 1938, the central piece of legislation that protects American workers. A 1947 Supreme Court decision, Walling v. Portland Terminal, established a narrow, common-sense exemption for those enrolled in a genuine training program. But few internships these days are serious about training, and — as in this case — most don’t even pretend. What started out in hospitals long ago, and later turned into a well-intentioned corporate recruiting and training tool, has become in recent decades something altogether different. Unscrupulous employers quietly drove a truck through the Walling loophole; schools made it official with academic credit and internship fairs; government looked the other way; and desperate young people have to play along.

Fox is reportedly considering an appeal, knowing that the Black Swan case is just the tip of the internship iceberg and reluctant to let the precedent stand. But the interns are confident. “I think we have a clear-cut case,” says Glatt, “and the higher it goes, the more the reasoning is affirmed and the better it is for labor, for workers, for students, all across the country.” According to one of the interns’ lawyers, Juno Turner, the next step is to apply the reasoning in this decision to an estimated 100 to 150 Fox Searchlight office interns who were certified as a class by Judge Pauley on Tuesday in a quieter but equally important victory.

(MORE: The Beginning of the End of the Unpaid Internship)

At least six similar lawsuits have been filed in the wake of Black Swan, in fields such as fashion, sports, television and modeling. All are still pending, except one against television personality Charlie Rose, which settled out of court. “There are a couple [of cases] in the pipeline as well,” says Turner, noting that “once we start winning and having successful outcomes for people, we tend to see a lot more claims. I would hope that companies would take note of the decision and take a hard look at their internship programs.”

Summer is often seen as internship season, even if the sad reality is that unpaid work is now a year-round phenomenon. But this summer may prove a turning point: it might just mark the beginning of the end of the unpaid internship.

Ross Perlin (@rossperlin) is the author of Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy.

29 comments
hamsterofdark
hamsterofdark

Student teachers don't simply work without pay - they are also on the hook for usually 12 credit hours of tuition.

ProfKlickberg
ProfKlickberg

Hopefully this will soon reach out to writers who work for websites that claim, "We don't pay ... but we can get you EXPOSURE!!!" 

Soon we'll hopefully live in a world where EVERYONE gets paid for their work and not just people who can afford (thanks to Mom and Dad) to work for free for a year or more before getting a paid position. 

LeeAnneLinnMartinez
LeeAnneLinnMartinez

I wonder if/ how this might apply to student teachers across the country?

VijayBanga
VijayBanga

Murdoch  has been trying to twist, manipulate and subvert the regulations in all places on whims but there is an end to such things and this was it

avocats
avocats

No, the next step is an appellate court considering the issue.  What people seek in internships is experience and contacts.  No one forces an intern to intern.  The fact is that interns don't bring anything particularly special to the table.  Companies will probably just eliminate intern programs rather than deal with the red tape of wages and overtime for "employees" whose value is marginal.  I am happy that my kid had an internship and that it led directly to her current successful career.  We all saw it as an investment.  (Note:  I could use an admin assistant/bookkeeper in my own business but continue to do it myself rather than hiring someone because the red tape involved is much more expensive than PAYING the person.  This is just plain stupid when there are lots of people who would be happy with the work @ $20-25/hr.)

DanielStuartHoffman
DanielStuartHoffman

Not only are such actions theft from the employee/intern, it is theft from the country as the taxes from the wages which should have been paid go missing. Just goes to show that our present labor laws are insufficient.

ry404989
ry404989

We have two types of intern programs in technology (IT). We have summer college intern programs which are specifically for IT students to spend time in an environment such as storage, networking, database management, etc. These are unpaid interns and it's generally for juniors and seniors only who are trying to decide what to specialize in. These interns rarely provide real value to the organization because they're not intended to be employees, they're prospect (and so is the company sponsoring the intern). Then we have paid intern programs where recent grads join the company under a basic probationary period. Often these interns are well paid at $30k+ a year with the intention that they'll eventually join the company. Many times these paid interns are the same people who were unpaid interns the year before. The unpaid internship is NOT intended to work the person in question to death but to show them the value of certain organization types and job types. The value they get is obtaining real world knowledge and hopefully they also get a much better feel for which direction they want their career to go.. REAL value is provided. What these people are doing is nothing like a proper internship. It's more like rich people robbing desperate people. They also give a bad name to proper internship programs that provide solid value for the organization and the student they're trying to recruit.

okayfine
okayfine

I'm still not sure I understand how "legitimate internship" is defined. Are we talking about credit-based programs? When I was in college, about 150 years ago, I did an internship in a congressional district office & objected to being given nothing by filing to do, which they saved up all week until I arrived. I argued that I was there to learn the real work of the office & they weren't even TRYING to expose me to it. I was quite literally laughed at & told, I will never forget these words because they were so dismissive & insulting, "You're an intern, baby. Slave labor for us." And that's apparently STILL the way interns are considered, despite the law suits.

notLostInSpace
notLostInSpace

I want to see a change in how hospitals treat their young doctors.  Not called interns, but cheap labor they are.  They get paid little, if anything, and certainly nothing commensurate with their hours, which would blow away any other industry standard for work weeks and overtime.  Not to mention, oops, what kind of learning and caring can they do when they have worked 24 hours straight?

As a college teacher, I see a lot of kids get both kinds of internships.  A large not to be named auto rental company hires zillions of them and mows through them like grass....whereas a large defense contractor hires them, pays them, trains them, and in many cases hires them after graduation.

Sherm
Sherm

We custom designed a product for a customer.  Included in the piece price was enough profit to provide a fair wage and benefits for our workers.  The customer stole our design and built it himself using unpaid interns as labor.  Correct me if I'm wrong, but I think our way is how capitalism should work.

Hills887
Hills887

@hamsterofdark Most unpaid internships operate on the same premise. You don't get paid for your work and you're also paying for the college credit to have it count as an internship through the college, which many programs require.

AnnScott-Arnold
AnnScott-Arnold

@LeeAnneLinnMartinez 

No

Student teachers are directly supervised, coached and directed by a regular teacher (who is being paid to either teach to train the student in their place.) No one turns a student teacher lose in a classroom and then does nothing more. AT the end of the student teaching, they are evaluted by their supervising teacher and the school administration. It is very much training - and the student does not take the place of a paid teacher as that paid teacher is acting as their training teacher.

Kinzy
Kinzy

@avocats In response to "No one forces an intern to intern" - this just is not true. College students are basically forced to intern under the current system. If you don't do internships, you end up being passed over in the selection process for the next step, either grad school or employment. Young people are basically being blackmailied into working for free in order to have a shot at a future. The whole process is messed up and wrong and no labor should be free.

JennRiedy
JennRiedy

If they eliminate the internships then they will have to get the work done by someone...i.e. entry level workers who will be required to be provided with benefits and probably paid more than minimum wage in most industries. Given that...I wouldn't expect internships to disappear so much as morph into paid positions--because they will still be cheaper than entry level employees.

mjgf
mjgf

@avocatsIf interns don't bring anything particularly special to the table, why have them at all? And why have employees who have marginal value to begin with? For fun?

I've had plenty of interns whose parents paid for everything under the guise of "investment." Those interns were useless, every one. Since the parents were "investing" in their kid, the intern never learned the value of earning anything—or losing anything. And the parents treated me like a nanny whose primary skill was promoting their mediocre children to my network, and telling them how bright they were, and what great futures they would have. The interns I've had whose parents expected their kids to pay their own bills, and who expected me to genuinely compensate them for the labor I was getting—those interns were much more useful. If someone's worth having around, they're worth paying.

rivival37
rivival37

@ry404989 According to the National Association of Colleges and Employers, new CS grads (BS) averaged $57.5K, engineers over 60K.  $30K+ is not well paid by industry standards.  

If you and your company cannot get real value out of  IT students with 2 and 3 years college, you're incompetent.  I've worked with interns in engineering, and while you do get a bozo now and then, most aren't, and some are real good.

I strongly suspect you are lying to justify stealing labor.

xtin_t
xtin_t

@ry404989 I worked as an intern when I was a student in Mech Eng and got paid $13/hr in 1995 as did my fellow students.  When the job market dried up and became more competitive employers started taking advantage of young workers.  

Interns should be paid.  They have bills to pay (rent, tuition).  Do they show up at your office everyday and do some work?  Then pay them because they are employees.  If they are free to come in for an hour and leave and not do anything then you could argue that they are not employees.

LindaLuke
LindaLuke

@okayfine 

The last employer I worked with had an intern. The filing was saved up for her each week. She was brilliant like you wouldn't believe, but she was just counting up the hours, and doing the menial tasks the company needed completed. I think everyone knows it, and some are trying to skirt the issue, but interns are looked at with disdain. It is unfortunate, because they have worked diligently to get through their training, and are eager, as you were, to gain understanding of the daily workings in their field. 

I do hope this continues to resolve in favor of the emerging students. I am also an older mom- single, 47, one 9 year old son still at home, and just now looking at being able to start college for my own interests after seeing all of my older sons get going. I can see things from a more reasonable perspective, rational, well rounded... It is not reasonable from my position to commit 160 hours potentially free labor as a requirement to completion of my education.  I have actually been stumped as to how a person can overcome this obstacle. 

RebeccaDelaney
RebeccaDelaney

@okayfineI wrote my graduate thesis on unpaid internships, labor law and socioeconomic equity. This may not answer your question, but maybe it'll help?


There's nothing about college credit that makes an internship more (or less) legitimate -- at least, not with respect to the Fair Labor Standards Act, which is the law applied here.

The court case Perlin mentions above established a six-point test to help determine whether a so-called internship is a genuine training experience and therefore exempt from minimum wage law. It's complicated, but basically, if XYZ Corp want to hire Suzy the Intern and have it be legal, XYZ Corp has to invest more time, money, and special energy into the Suzy's learning experience than the value XYZ Corp gets out of Suzy's work.

In other words, if a private company wants to get out of paying an intern, they can't get much out of it besides a warm fuzzy feeling inside. Any benefit beyond that -- if it isn't outweighed by training-related losses -- and XYZ Corp had best cut Suzy the Intern a paycheck. College credit never enters the equation. After all, the company doesn't award the credit; that's the institution's thing.

On a practical level, this totally makes sense: After all, since many students have to pay for the credit hours themselves, not only do they wind up working for free -- they pay to work.

LindaLuke
LindaLuke

@Kinzy @avocats I recently looked into acquiring a Bachelor's degree in Medical IT. Part of the grad requirement was 160 hours of internship completed within 6 months.

RebeccaDelaney
RebeccaDelaney

@Kinzy @avocats Amen to Kinzy's point. Of course, the blackmail only applies to students who can afford to donate time in exchange for experience. There's another group of students who get left out of this conversation too often -- the students who can't afford the opportunity cost linked to an unpaid gig. These kids might relish the chance to network and get experience in the field just as much as anyone -- but since they're juggling school and couple part-time jobs just to make ends meet, it's simply not an option.

So it becomes this awful lather/rinse/repeat the problem thing -- a vicious cycle with a bias toward privileged students hardwired into the system. If you can afford to work for free -- and to pay the tuition associated with internship credits -- you're already at an advantage. Add the experience (we can argue whether the experience is worth a damn elsewhere) to the advantaged kid's resume, and the folks who started out not-so-lucky get stuck even further behind.

The unpaid intern may recognize there's something unfair going on, but since everyone does it -- and since they're getting the benefit, sour though it may be -- there's not a lot of incentive to make a big fuss.

MIMAAL12
MIMAAL12

@mjgf 

Thank you for  acknowledging kids like my age and how we work hard to pay our bills. I always thought my interning supervisors might not see my past or my current present. However, I work my butt off and I am still fighting to make it to the top. 

I work to support myself and my family. 

avocats
avocats

@xtin_t @ry404989     People "should be paid" because they have bills?  Wow.  And interns are free not to choose an internship.  As noted above, the traditional intern adds little value to a company (and indeed, likely costs some).  Throwing the baby out with the bath water makes no sense.  True internships are opportunities for learning and making connections. 

LindaLuke
LindaLuke

@RebeccaDelaney

Your quote, "After all, since many students have to pay for the credit hours themselves, not only do they wind up working for free -- they pay to work."

This is the part that has stumped me the most. I realize the cost to work for free, as well as the cost to pay for the education. What type of benefit do the college/employer have through this seemingly obvious collusion. Does the employer pay the college? Does the college pay the employer? Do they agree to supply one another in other ways? What? Otherwise, why would they try to work together at all? This is simply another variation of the slave labor trade.


xtin_t
xtin_t

@avocats @xtin_t @ry404989 And the sentence after that was "Do they show up at your office everyday and do some work?  Then pay them because they are employees."  

mjgf
mjgf

@avocats But if all entry-level jobs are slowly being replaced by unpaid internships, what then? Your biggest argument for getting rid of internships, frankly, isn't economic: it's that interns themselves are useless for everything except collecting other people's business cards.