How Can Interns Increase Your Clients’ EPLI Risks?

How Can Interns Increase Your Clients’ EPLI Risks?

By now, many people have heard of the 2013 case where interns who worked on the film Black Swan filed a lawsuit against Fox Searchlight Pictures. The suit was filed in federal court in New York, and claimed that they were actually employees, not interns, and should have been paid. The court evaluated the case using a 2010 U.S. Department of Labor (DOL) Fact Sheet that provided specific requirements an unpaid internship must meet.

In June of 2013, U.S. District Court Judge William H. Paley III found that based on this fact sheet the menial tasks the interns on the Black Swan production performed, such as taking out the trash and taking lunch orders, had little educational value and would have required paid employees if the interns had not been there. The interns in the case effectively won.

While having the right Employment Practices Liability Insurance (EPLI) coverage will protect your client from the financial loss that a lawsuit can bring, it’s also important to know how interns can increase their EPLI Risks to begin with, to potentially avoid a lawsuit all together.

In order to be properly classified as an unpaid intern rather than an employee, the internship must meet all requirements under the U.S. Department of Labor’s Fair Labor Standards Act (FLSA). These requirements are:

• The internship must be for the benefit of the intern.
• The internship must provide similar training that would be given in an educational environment.
• The employer should not derive any immediate advantage from the intern.
• The intern must not displace regular employees, and should work under close supervision of the existing staff.
• The intern is not entitled to a job at the end of the internship.
• The intern understands that he or she is not entitled to monetary compensation.

If your client is ever in doubt about whether or not they have met all the necessary guidelines regarding unpaid programs, they should check with the Department of Labor or their human resources or general counsel departments.

At PLRisk Advisors, we understand that EPLI risks can affect any industry. Whether your client is head of a large corporation or a small business owner, Employment Practices Liability Insurance should be part of their comprehensive insurance program. This policy provides coverage for legal fees, settlements and damage awards that result from employee claims of misconduct. To learn more, please contact us at (855) 403-5982.