On Tuesday, a federal court judge in New York ruled that Fox Searchlight Pictures violated federal and state wage laws by not paying production interns.  The production interns, Eric Glatt and Alexander Footman, worked on the psychological thriller “Black Swan” performing work such as reconciling purchase orders and invoices, drafting cover letters, filing, making copies, arranging travel plans, answering phones and running errands.  Glatt and Footman sued Fox Searchlight in September 2011, claiming the company merely labeled them as “interns” for free labor.

Glatt and Footman moved for summary judgment asking the court, among other things, to determine that they were employees (rather than interns) of Fox Searchlight and, therefore, should have been paid.  Applying the Department of Labor’s (“DOL”) criteria for internships (see our previous blog post discussing the criteria, Unpaid Internships = Cheap Labor? Think Again), the court found that Glatt and Footman were employees pursuant to the Fair Labor Standards Act and New York law.  Click here for court order.

The court concluded, they worked as paid employees work, providing an immediate advantage to their employer and performing low-level tasks not requiring specialized training.  The benefits they may have received–such as knowledge of how production or accounting office functions or references for future jobs–are the results of simply having worked as any other employee works, not of internships designed to be uniquely educational to the interns and of little utility to the employer.

The court also granted class certification to a group of unpaid interns in New York who worked in several divisions of the Fox Entertainment Group.

The ruling is a blow to the film and entertainment industries which rely heavily on unpaid internships.  However, the court’s decision could have broader implications for all employers with unpaid internships.  In a weak job market it may seem enticing to hire a recent grad for “free” but, as this case warns, employers need to make sure that an internship is for the benefit of the intern and not the employer.