Released on December 3, 2010, the movie Black Swan, about a ballerina slowly becoming mentally unstable, received great reviews. The star, Natalie Portman, received an Academy Award for Best Actress and was paid $2 million to perform in the movie. Including her fee, the production cost of the movie was $13 million. A year and a half after the opening, Black Swan has grossed more than $100 million in the United Sates and more than $222 million outside the United States to make its worldwide gross revenues almost $330 million. However, behind the scenes when the movie was made, there were scores of unpaid interns who were promised the chance to get their foot in the door of the entertainment business in exchange for their labor. In September 2011, two of those unpaid interns sued Fox Searchlight, the production company that made Black Swan. Their lawsuit states that “Fox Searchlight’s unpaid interns are a crucial labor force on its productions, functioning as production assistants and bookkeepers and performing secretarial and janitorial work . . . In misclassifying many of its workers as unpaid interns, Fox Searchlight has denied them the benefits that the law affords to employees.” More than 100 unpaid interns had worked on various projects for Fox Searchlight. The movie industry defended the use of unpaid interns by stating that the internships are educational, valuable, and a unique opportunity to enter the industry. On June 11, 2013, a Federal District Court judge ruled that Fox Searchlight had violated federal and New York minimum wage laws by not compensating its interns. The judge ruled that the interns were essentially performing the same functions as regular employees. Table 13.11 lists the conditions that must be met by a firm if it is going to use unpaid interns. These conditions are set out in the Fair Labor Standards Act (FLSA) that was passed in 1938.

Questions

1. Do you think the responsibilities of the intern programs at Fox Searchlight meet the conditions required by the Fair Labor Standards Act?

2. Are the criteria established in the FLSA related to unpaid interns obsolete?

3. Why do companies decide not to pay interns?

4. How committed is Fox Searchlight in its promise of a “foot in the door” to get a permanent position in the industry?

5. If 100 unpaid interns had received a salary and benefits of $20,000 a year, it would have added $2 million in expenses to the production of Black Swan. Would this amount be a financial burden for Fox Searchlight, based on the worldwide gross revenue of the film?

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TABLE 13.11 Conditions That Must Be Met to Exclude an Unpaid Intern From the Fair Labor Standards Act of 1938 1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment; 2. The internship experience is for the benefit of the intern; 3. The intern does not displace regular employees, but works under close supervision of existing staff; 4. The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded; 5. The intern is not necessarily entitled to a job at the conclusion of the internship; and 6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.