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Law360—Ben James

A district court judge used the wrong test for determining who qualifies as an “employee” under wage-and-hour law when he denied class certification to Hearst Corp.'s former unpaid interns, the U.S. Department of Labor told the Second Circuit on Friday.

The DOL lodged an amicus brief at the appeals court in support of the plaintiffs, who are challenging U.S. District Judge Harold Baer's May decision denying class certification on their New York Labor Law claims and rejecting their bid for summary judgment on their status as “employees” under the Fair Labor Standards Act and NYLL.

A six-part DOL test for ascertaining whether a trainee or intern qualifies as an employee under the FLSA would have been the right way to determine the plaintiffs' employment status, and Judge Baer dropped the ball by using another standard, the agency argued.

“Instead of utilizing the department's long-standing, objective test, the district court adopted a more subjective 'totality of the circumstances' test that necessarily makes it more difficult for both employers and interns, as well as courts, to determine whether interns are employees entitled to the protections of the FLSA,” the DOL's amicus brief said.

In November, the Second Circuit gave the Hearst interns a green light to pursue their appeal of Judge Baer's decision. In the same order the appeals court agreed to hear an appeal from Fox Entertainment Group Inc. in a separate intern wage case, where Fox is taking aim at a June decision granting class and collective certification to an ex-intern who brought wage and hour claims against Fox.

The Fox and Hearst intern appeals, which are being heard in tandem, involve the question of what the proper test is for determining employee, as opposed to intern, status for wage-and-hour purposes.

On March 28, the Hearst plaintiffs filed their opening brief in their appeal, claiming that the Second Circuit should reject the test used by Judge Baer, calling it “unpredictable, subjective and hard to apply.”

The court ought to adopt the six-part test laid out in an April 2010 DOL fact sheet, the interns said, as did the DOL.

Hearst argued that the trial court should use a “balancing of the benefits” test, which considers the totality of the circumstances when assessing the relationship between a company and interns, and while Judge Baer didn't completely disregard the six-part DOL test, he said the totality-of-circumstances test represented “the prevailing view,” the DOL said in Friday's brief.

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The Hearst suit was filed in February 2012 by Xuedan Wang, who says she regularly worked more than 40 hours per week as an unpaid intern for several months at Harper's Bazaar magazine.

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In addition to the DOL's recent filing in the Hearst case, the closely watched intern appeals at the Second Circuit have drawn amicus input from numerous groups, including the National Employment Lawyers Association, the American Association of State Colleges and Universities, and the U.S. Chamber of Commerce.

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Outten & Golden LLP's Juno Turner, an attorney for the interns in both cases, said they were glad to have the DOL's support.

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The interns in both appeals are represented by Adam T. Klein, Rachel M. Bien and Juno E. Turner of Outten & Golden LLP.

The cases are Glatt v. Fox Searchlight Pictures Inc., case number 13-4478; and Wang v. The Hearst Corp., case number 13-4480, both in the U.S. Court of Appeals for the Second Circuit.

The Los Angeles Times—By Daniel Miller and John Horn

Melvin Mar's entrée to Hollywood was far from glamorous. As an unpaid intern for "Platoon" producer Arnold Kopelson, Mar was responsible for fetching his boss' lunch of matzo ball soup every day.

Mar calculated to the minute how long it would take to walk from the production company's Century City offices to the Stage Deli nearby, buy the soup and decant it into a bowl on Kopelson's desk, still piping hot, at precisely 1 p.m.

Mar parlayed his internship into jobs at DreamWorks and Scott Rudin Productions.

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Uncompensated minions are as central to the movie business as private jets, splashy premieres and $200 lunches. But the Hollywood tradition is under assault.

A class action by former interns on the 2010 film "Black Swan" could radically change the industry's reliance on unpaid neophytes. The suit seeks back pay, damages and an order barring use of unpaid interns at Fox Searchlight Pictures and other units of Fox Entertainment Group.

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It would also force Hollywood to change everything from the way film crews are assembled to the manner in which new talent is cultivated.

Eric Glatt, who was an intern for the New York-based "Black Swan" production, is a lead plaintiff in the lawsuit. He gave up a $95,000 desk job at insurance company American International Group to pursue his dream of becoming a film editor.

Glatt's "Black Swan" duties included running errands for the movie's famously exacting director, Darren Aronofsky.

ON LOCATION: Where the cameras roll

During post-production, Aronofsky needed a hypoallergenic pillow — he wanted to be comfortable in the editing room — and Glatt, then 40, was given the assignment.

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During his roughly nine months on the film, Glatt said, he was also sent on errands to get Aronofsky "the perfect scented candle" and his favorite tea, PG Tips.

"The one thing you learn as an intern is don't ask," Glatt said.

Glatt, who spent $5,500 for a film editing course before signing on with "Black Swan," had hoped an internship would be his pathway to a film career. But Glatt came to believe that Hollywood was taking advantage of people like him — and violating the Fair Labor Standards Act, which mandates that unpaid internships benefit the interns, not the employers.

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The lawsuit contends that minimum wage laws were violated during the making of "Black Swan." The plaintiffs are seeking back pay and damages for themselves and an unspecified number of other interns who worked at Searchlight and other units of Fox Entertainment Group.

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Fox has appealed Pauley's ruling, contending that interns are not employees subject to wage protection if they, not the employer, are the "primary beneficiaries" of the internships.

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A ruling by New York's 2nd Circuit Court of Appeals is expected by early next year.

The Department of Labor does not track internships, paid or unpaid, but workplace experts agree that internships have become a rite of passage for entry into all kinds of white-collar jobs. Ross Perlin, author of the book "Intern Nation," estimates there are 500,000 unpaid interns nationwide (based on census data and private research) and says the practice saves companies about $2 billion annually in labor costs.

In Hollywood, interns fetch cappuccinos, read scripts, answer phones and even top off talent agents' gas tanks. The sometimes demeaning tasks are part of a business culture that puts a premium on newcomers paying their dues.

Some view internships as one of the only ways to get a foot in the film business' narrow door, and others consider them an invaluable apprenticeship, where menial tasks help prepare interns for the rigors of the industry and foster crucial relationships that lead to better jobs.

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Historically, unpaid internships have been prevalent in Hollywood because there are many more job seekers than openings. The practice expanded in other businesses over the last decade, author Perlin said, but entertainment remains one of the bastions of unpaid labor — as does publishing, another highly competitive field.

Perhaps not surprisingly, the Fox Searchlight lawsuit was followed by others from unpaid interns at Warner Music Group and Atlantic Records, and at publishing houses Condé Nast and Hearst Corp., the latter of which brought on roughly 3,000 interns from 2006 to 2012.

The suits appear to have made an impact. Condé Nast canceled its unpaid internship program last fall, and last year, talk show host Charlie Rose and his production company paid about $110,000 to settle a lawsuit brought by former unpaid interns, with part of the proceeds going to the interns as back pay.

Fox Entertainment Group and Universal Pictures now say they pay interns. NBCUniversal, the parent of Universal Pictures, also is subject to a lawsuit filed by former unpaid interns who allege the company violated the Fair Labor Standards Act.

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According to UCLA's Career Center, roughly 90% of the internships offered by production companies through the university's BruinView website are unpaid. At least one major talent agency distributes a list of entertainment jobs that includes many unpaid internships. A Nov. 26 compilation included 36 film and television internships, 16 of them unpaid.

A posting for an unpaid internship with "Rush Hour" filmmaker Brett Ratner's RatPac Entertainment said duties would include "Xeroxing, running errands, research, filing and sorting, dubbing tapes, temping on assistants' desks, answering phones, reading scripts and writing coverage (summaries of scripts)." A similar posting at Green Hat Films, the production banner of "The Hangover" filmmaker Todd Phillips, described duties including "reading scripts, writing coverage, answering phones and other office tasks."

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Ryan Stayton, 36, moved to Los Angeles in 2009 to break into Hollywood. He had four internships in the last year, all unpaid. He said more entertainment companies are requiring their interns to obtain school credit, a practice that Cheryl Orr, a labor lawyer not involved in the litigation, says does not exempt companies from having to adhere to federal guidelines for unpaid internships.

"A young kid who is receiving credit believes it to be some fashion of tangible recompense to them," said Stayton, who graduated from the University of Michigan more than a decade ago.

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But of the 20 or so interns he knows, only one has parlayed the work into a paying job.

"I have had a good experience with all of these companies," Stayton said, "but I don't feel like I will be satisfied until I get a paid job."

The former Fox Searchlight interns have said the company's program was in violation of the six legal criteria for unpaid internships issued by the Department of Labor in April 2010 (nonprofits are exempt from the rules). Before applying the criteria to internships, the Department of Labor had used the guidelines for decades to evaluate the status of so-called "trainees" under the Fair Labor Standards Act.

The guidelines say that an unpaid internship should be "similar to training which would be given in an educational environment" and offer the employer "no immediate advantage from the activities of the intern." The intern, furthermore, should not "displace regular employees," according to the guidelines.

Because lower courts have disagreed about what rules apply, two cases brought by Glatt's lawyers — against Fox Searchlight and Hearst — simultaneously will be decided by the 2nd Circuit Court of Appeals.

Glatt and Alex Footman, a fellow plaintiff and former "Black Swan" intern, have been pilloried by people trying to break into Hollywood since filing their complaint. Footman has received expletive-laced emails, one saying he is "ruining the film industry for everyone else."

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Glatt, now 44 and a law student at Georgetown University, insisted the dispute was not "about whiny millennials who don't want to do real work."

"It's the employer who is acting entitled," he said, "because they think they can get something for free, trading on the notion that it's cool to be on a set with someone like Aronofsky."

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Huffington Post—

NBC Universal is the latest media company to get sued by former unpaid interns.

According to The Hollywood Reporter, NBC Universal was sued by former MSNBC intern Jesse Moore, who worked in the cable network's booking department in 2011.

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The legal action is the latest in a string of lawsuits filed against major media companies by former unpaid interns. Earlier this week, Charlie Rose's production company paid $110,000 to settle a lawsuit filed by former unpaid interns. In June, a Manhattan judge ruled that former interns on the set of the movie "Black Swan" were de facto employees of Fox Searchlight Pictures entitled to payment. On Tuesday, Fox Searchlight filed documents demonstrating an interest in appealing the court's ruling.

Unpaid interns have also filed lawsuits against Conde Nast, Hearst and Gawker.

(h/t The Hollywood Reporter)

Law360—Abigail Rubenstein

A New York federal judge gave the green light to former unpaid interns bringing a wage-and-hour suit against Hearst Corp. to appeal his ruling denying them class certification, saying the Second Circuit could also provide clarity for other pending intern suits.

U.S. District Judge Harold Baer granted a bid by former interns Xuedan Wang and Erin Spencer to certify for interlocutory appeal his May 7 ruling refusing to certify a class on their New York Labor Law and denying them partial summary judgment on the question of whether they qualified as “employees” under federal and state wage law.

In his order allowing the plaintiffs to seek immediate review by the Second Circuit, Judge Baer said that controlling questions of law were present — including whether the criteria were met for class certification and whether a totality of the circumstances test was the right one for evaluating the interns' employment status — and that answers from the Second Circuit on these questions would not only provide clarity for the present case but also for other cases brought by interns in the circuit.

“A decision on these questions will significantly affect the conduct of other lawsuits now pending in the district courts which have relied on other legal standards or the same legal standard, but have come out differently,” the judge said.

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In that case, U.S. District Judge William H. Pauley III ruled that two interns who had who worked on the Fox Searchlight-produced movie “Black Swan,” should have been classified as employees under the Fair Labor Standards Act and certified a class of interns who worked in five Fox Entertainment Group units in New York to bring related claims under state law.

“[A]s the questions raised by plaintiffs in this case and in Glatt are difficult and one of first impression, they clearly provide fodder for different opinions and have spawned them,” Judge Baer said.

If the Second Circuit provides clarification or a different legal standard, it will guide the resolution of outstanding issues pending throughout the circuit, he said.

“We're pleased that the judge agreed with our motion that these issues are ripe for review, and we are hopeful that the Second Circuit will see things our way,” Juno Turner of Outten & Golden LLP, who represents the plaintiffs, told Law360.

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The Second Circuit will still have to decide whether or not to review the judge's ruling.

If the Second Circuit does agree to take the case at this stage, its ruling could have a significant impact in the wage-and-hour realm where suits by interns claiming they should have been treated as employees and paid minimum wage and overtime are becoming increasingly popular.

The suit against Hearst, which Wang, a former intern at Harper's Bazaar, originally filed in February 2012, marked part of a beginning of a wave of intern suits.

And even more interns have lodged suits in the wake of the ruling in favor of the interns in the Fox Searchlight case.

The Hearst interns are represented by Adam T. Klein, Rachel M. Bien and Juno Turner of Outten & Golden LLP.

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The case is Wang v. The Hearst Corp., case No. 1:12-cv-00793, in the U.S. District Court for the Southern District of New York.

thomsonreuters.com—Carlyn Kolker

The law governing unpaid interns has become so murky that even a victorious party in a current case is hoping an appeals court will weigh in to clarify it.

In the past two months, two judges in the Southern District of New York have issued opposing rulings on the topic of unpaid interns. On June 11, U.S. District Judge William Pauley ruled in a summary judgment motion that interns suing film company Fox Searchlight were employees.

A month earlier, U.S. District Judge Harold Baer declined to make a similar determination, ruling that the issue of whether interns suing publishing giant Hearst Corp were employees was appropriate for a trial. Baer also declined to certify as a class action the case against Hearst.

At issue in both cases is the central question of what constitutes an employee.

In the Fox case, the defense argued that the so-called "primary beneficiary" test - a test of whether the worker or the company is the primary beneficiary of the labor the intern provides - should be invoked to make the determination. Pauley rejected the defense's argument, calling the test "subjective and unpredictable."

In the Hearst case, Baer disagreed with the interns suing the publishing house, who said that a Labor Department checklist should be followed to determine if an intern is an employee. Instead, he looked to the "totality of circumstances" and let the issue proceed to trial. He noted the benefits test should be a part of this consideration.

The plaintiffs in the Hearst case have asked Baer to certify the case for an interlocutory appeal to the 2nd Circuit. Interlocutory appeals are unusual, as appeals courts rarely grant appeals midway through a case's proceedings in the district court.

And even though Hearst was essentially the victor in Baer's ruling, it has said it won't oppose the plaintiffs' request for interlocutory appeal, because it wants clarity on the law of interns.

LAWYERS SEEK CLARIFICATION

"Hearst submits that an in-district split with respect to the legal standard in two cases proceeding concurrently justifies immediate review by the Second Circuit," Hearst wrote in a Friday motion, in which it also referred to the plaintiffs' criticism of Baer's ruling as "baseless" and having "utter lack of foundation.

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The issue of the legal standards governing interns is likely to arise in the courts again soon. On June 13 two former interns at the New Yorker and W Magazine sued Conde Nast Publications, alleging the publishing giant violated federal labor laws by paying interns a nominal wage.

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The case against Hearst is Xuedan Wang v. The Hearst Corporation, U.S. District Court for the Southern District of New York, No. 12cv00793.

For plaintiffs Xuedan Wang et al: Adam Klein, Rachel Bien, Deirdre Aaron, Juno Turner, Justin Swartz, Michael Scimone, Molly Brooks, Paul Mollica and Sally Abrahamson of Outten & Golden.

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