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Appellate Court Makes Pursuing Claims By Unpaid Interns Much Harder

The U.S. Department of Labor is responsible for regulating employers all over the country and enforcing labor laws, including wage and hour mandates and internships. As part of these responsibilities, the department often defines certain roles within the employer/employee relationship to make sure everything runs smoothly.

But the department is not a governing body. It can create guidelines for how people are supposed to behave in the working world, but it has no power to enforce anything other than the laws enacted by the legislative body of government.

For example, the Department of Labor specifies that, in order for employers to use unpaid interns, the employer must not substantially benefit from the work the intern performs and the intern must gain valuable knowledge of the industry. The internship needs to consist of more education than work and the work the intern performs cannot replace any work performed by paid employees.

In a recent class action wage and hour lawsuit, a federal judge used the Department of Labor’s guidelines to determine whether a class of plaintiffs should have been paid for the work they did during their internships with Fox Searchlight Pictures.

The two interns who filed the wage and hour lawsuit, worked on the film “Black Swan”. Another former intern for Fox, later joined the two original interns to pursue a class action lawsuit against the production company. Their responsibilities allegedly included making copies, maintaining takeout menus, putting together furniture, and taking out the garbage. Since the interns don’t benefit from performing such mundane tasks, they filed the lawsuit claiming they should have been paid for their time working for Fox.

Judge William H. Pauly III of the Federal District Court agreed with the plaintiffs that their internships should have been paid. Fox appealed the decision and the appellate court overturned Pauly’s ruling and sent the case back to the lower court.

Judge John M. Walker Jr., writing on behalf of the United States Court of Appeals for the Second Circuit Court, argued that the Department of Labor’s criteria was out of date and not binding on federal courts.

Instead of the current criteria, Fox proposed a “primary beneficiary test” to determine whether the intern or the employer benefited the most from the internship.

Judge Walker agreed that such a test should be implemented, and that the test should depend on the internship’s educational benefits – for example, whether it was tied to the intern’s formal schooling or took place in an educational setting.

Because Judge Walker sent the case back to the lower court, this does not mean the end of the lawsuit, although it could put an end to countless other claims filed by interns. Students working as interns will now have a much more difficult time getting paid for their work and even those who are not students (such as the plaintiffs in the current lawsuit against Fox) will probably be unable to file a class action lawsuit.

The proposed “primary beneficiary test” will have to be conducted on an individual basis, because some interns will get more out of the experience than others. The necessity for such a test will eliminate the ability to file class action lawsuits, which requires plaintiffs to prove the class members suffered as a result of a universal policy.

The Chicago class action attorneys at the Chicago Overtime Law Center have three decades of experience fighting to help employees who are victims of wage, overtime and tip theft by their employers. We have a team of Chicago unpaid overtime lawyers who concentrate on prosecuting state and nationwide class action lawsuits. Our attorneys work out of Chicago and Oak Brook offices and pursue claims for workers all over the Chicago area including Evanston and Waukegan. We protect unpaid workers who haven’t received overtime throughout the Chicago area including in DuPage, Lake, McHenry, Kane and Cook Counties.

Our Mundelein and Waukegan overtime lawyers are intimately familiar with the issues that arise during wage claim litigation, and we know the laws that govern overtime cases well. Many employers mis-classify employees as being exempt from overtime laws and pay workers salaries instead of hourly wages in order to avoid paying them overtime. Some employers mistakenly classify employees as exempt and others intentionally do so in order to circumvent the law. In either case, workers do not receive the wages they should, and a lawsuit may be the only way to recover their earned wages.

The Chicago Overtime Law Center is based in Chicago, and represents clients throughout the country who have unpaid overtime and other employment right claims.