As summer approaches, many companies will face the tempting invitation from students to work “for free” as interns. While some companies may consider jumping at the chance to enhance their workforce without incurring the costs of compensation, health insurance and other benefits of being an employee, as the U.S. District Court for the Southern District of New York just reminded the business community, having unpaid interns can be perilous if you don’t know – or if you ignore – the law.
Like many businesses, Fox Searchlight Pictures, Inc. hires a number of unpaid interns every year. In 2011, however, several of their “interns” sued, claiming that they should have been paid for the hours they had worked performing routine tasks that would otherwise have been performed by regular employees in connection with the production of the film Black Swan. On June 11, 2013, U.S. District Court Judge William H. Pauley III issued a ruling in which he agreed that two interns, Eric Glatt and Alexander Footman, were “classified improperly as unpaid interns and are ‘employees’…” of Fox Searchlight. Judge Pauley went on to say that these putative interns:
…worked as paid employees work, providing an immediate advantage to
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Before last week, a non-Massachusetts employer could insulate itself from employee claims under the Massachusetts Weekly Payment of Wages Act (“Wage Act”) simply by having its employees agree that all employment disputes be litigated in the employer’s home state. That all changed with the Massachusetts Supreme Judicial Court’s decision in Melia v. Zenhire, Inc.
In that case, plaintiff Edward Melia, who worked and lived in Massachusetts, challenged the validity of a forum selection clause contained in his employment agreement requiring that any disputes related to his employment be litigated in New York. Melia’s claims against Zenhire included claims for unpaid wages, unpaid vacation and sick day wages, severance pay and unreimbursed expenses. Melia argued that the forum selection clause was a “special contract” prohibited by the Wage Act and against Massachusetts public policy. The SJC disagreed, determining that, due to comity amongst state courts, and in light of most states’ choice of law rules, there is a presumption that other jurisdictions would apply laws such as the Wage Act. As such, there was no public policy reason to invalidate a forum selection clause in an employment agreement.
The SJC did leave one opening for employees in this regard, in … Keep reading