Unpaid internships spawn suits. Are they on their way out?

Working full-time on the set of the Fox Searchlight film "Black Swan" in 2010, Eric Glatt slogged through a long list of menial tasks. He made coffee and photocopied scripts, wrote invoices, organized file cabinets, and ran errands for the films producers.

And he did it all for free.

Mr. Glatt was part of a growing, shadowy category of American workers: the unpaid intern. While the number of people working such jobs is hard to pin down, estimates suggest that between a third and a half of college interns aren't paid, according to Intern Bridge, a research firm based in Austin. With 14 million students enrolled in four-year colleges, and at least half expected to work an internship at some point, that suggests that at least 500,000 students (and perhaps more than a million) take jobs each year that offer no pay.

Those numbers have been on a steady upward march over the past two decades, as internships have crowded out entry-level jobs as the starting point in many career fields. But now the system is being challenged in court, which may signal that the heyday of the unpaid internship is coming to an end.

“The law hasn’t shifted, but attention to it has increased,” says Michael Harper, a professor of law at Boston University, in a telephone interview. “This encourages more lawyers to bring cases and to say, 'These people are being taken advantage of. They’re not being paid for doing productive work.' ”

Last week, a federal district court in Manhattan ruled that Fox Searchlight violated minimum wage laws by not paying Glatt and another intern on the "Black Swan" set, setting a precedent that experts say could eventually ripple outward to other companies and fields.

The Black Swan interns “did not acquire any new skills aside from those specific to Black Swan’s back office, such as how it watermarked scripts or how the photocopier or coffee maker operated,” District Judge William Pauley wrote in his June 11 opinion. “On the other hand, Searchlight received the benefits of their unpaid work, which otherwise would have required paid employees.”

Three days after Judge Pauley’s ruling, two former interns at the publishing tycoon Condé Nast filed a class action suit of their own, alleging they too deserved pay for the low-level work they’d done as interns for the company’s magazines – organizing fashion accessories, opening mail, and running personal errands for their bosses, among other not-strictly-career-building tasks.

That suit joins at least four others currently winding their way through courts across the United States, challenging the notion that it’s legal to send young people to work with only the promise of connections and a line item on their résumé. A fifth suit, against TV personality Charlie Rose, settled out of court last year, with 190 of his former interns receiving $110 per week in back wages.

The cases “serve as a reminder of what the law says, and of what the basic ethic in our society needs to be,” says Ross Perlin, a seasoned veteran of unpaid internships and author of "Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy," in a telephone interview. “There are very few situations in which a for-profit company need not pay someone who works for it.”

That goes against the conventional logic underpinning unpaid internships – that they provide young people with enough experience, education, and long-term value to substitute for cash compensation.

In fact, the circumstances under which a company can take on unpaid workers are defined, specific, and narrow. The Department of Labor says that in order to be legitimate under the Fair Labor Standards Act, unpaid internships must meet six stringent criteria, including providing training from which the company gets no immediate benefit (presumably ruling out coffee-fetching and envelope-licking) and not assigning interns to tasks that displace regular employees. What’s more, the federal criteria note, on a fundamental level the internship experience must be “for the benefit of the intern.” 

Glatt’s errand-running, trash-collecting duties at Fox Searchlight, in other words, hardly fit the bill.

But what does constitute a “legitimate” unpaid internship is a moving target. When such internships began to emerge for the first time in the 1960s and ‘70s, Mr. Perlin says, their primary purpose was to give students a window into fields they hoped to pursue. Those interns were generally “participant observers,” shadowing employers and observing how companies and organizations operated.

Over time, however, the center of gravity in the unpaid intern world shifted. As college students and recent graduates sought an edge in competitive job markets, internships came to be seen as a natural career steppingstone, bridging the gap between classroom skills and a salaried position.  

Skittish about the legality of such arrangements, however, many companies began to require that their unpaid interns receive academic credit for their work, imbuing them with seeming educational legitimacy. At the same time, however, that requirement placed a new burden on would-be interns. Now, not only did you need to find a way to work for free, you also often had to pay your university for the privilege of doing so.

Those unpaid internships are actually much less effective career-builders than their paid counterparts, according to Intern Bridge. Its 2012 survey found that students who completed a paid internship were more than twice as likely to receive a job offer from their employer than students whose internships were unpaid. 

For his part, however, Glatt got at least one thing out of his unpaid internship experience: a new career path. He’s now a law student at Georgetown University in Washington, D.C. 

(Full disclosure: The author of this article is a Monitor intern. She is paid.)