Firefighters & the Black Swan: Turning Volunteers and Interns into Employees

By Michael R. Ewing

Organizations of every kind enlist the aid of volunteer workers and offer internship programs to individuals who are interested in what they do. Traditionally, the distinction between these folks and the actual employees of the organizations where they work has been very easy to draw. Recent litigation, however − involving a volunteer firefighter from Ohio and two interns from the film, Black Swan − has done much to blur that line. In both instances, these unpaid workers filed lawsuits to enforce their employment rights under federal law, arguing that they are much more than their titles suggest—rather, they are employees.

These cases teach a valuable and familiar lesson to any organization that utilizes these types of workers: perception (even when it is understood on the front end) is not always reality. Indeed, as any business who utilizes independent contractors knows, a variety of legal factors determines who works for you and who does not. The rest is merely terminology.

I. The Volunteer Firefighter, Protected by Title VII

In early September, the Sixth Circuit opened the door to Title VII (and other employment laws) for unpaid volunteers. In Bryson v. Middlefield Volunteer Fire. Dept., Inc., the Court held that, under Title VII, there is no requirement that a worker receive "significant renumeration" before being considered an employee. --- F.3d. ----, 2011 WL 3873789, *5-6 (6th Cir. Sept. 2, 2011). Instead, compensation is only one of a number of factors that should inform that determination. Id. Unpaid volunteers, therefore, could very well be employees and thus entitled to all the protections afforded by that relationship.

The plaintiff in Bryson was a volunteer firefighter and administrative assistant for the area's fire department. She claimed that, while she worked for the department, she was subjected to a sexually hostile work environment, promised increased benefits in exchange for sexual favors, and that she was later constructively discharged for complaining about her treatment. Id. at *1-2. The fire department challenged her claim by arguing that it was not an "employer" under Title VII. Id. at *2. Specifically, the department admitted that it employed eight workers but maintained that it could not meet Title VII's 15-employee threshold because the remainder of its personnel—all volunteer fire-fighters—did not qualify. Id. at *2, *5. The District Court agreed, holding that − before the common law agency factors could be considered for employment status − any plaintiff under Title VII had to first prove that she received "significant renumeration." Id. at *5. Because the plaintiff in Bryson only received insurance coverage, worker's compensation eligibility, occasional gift cards, personal use of the department's facilities, and access to an emergency fund, the District Court held that she failed to make that showing. Id. Her case was accordingly dismissed.

The Sixth Circuit disagreed with the District Court's entire approach. Id. at *5-6. "[W]e decline to [hold] that a plaintiff must first demonstrate that she received significant renumeration" and, instead, "consider renumeration [only] as a factor when determining whether an employment relationship exists." Id. (emphasis added). The Court reiterated that the Supreme Court has made clear that "no one factor, including renumeration, is decisive, and therefore no one factor is an independent antecedent requirement" to an employment relationship. Id. at *6. Because the District Court failed to take into account any of the other agency factors relevant to that determination, its ruling was reversed and remanded. Id.

The impact of this decision, at least in the Sixth Circuit, is significant. The full array of the common law agency factors determines a volunteer's employment status from the start. In addition to compensation, those factors include, first and foremost, "the hiring party's right to control the manner and means [of the work];" as well as:

[T]he skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship ... ; the hiring party['s] ... right to assign additional projects ... ; the [worker's] discretion over when and how long to work; the method of payment; the [worker's] role in hiring and paying assistants; whether the work is part of the [hiring party's] regular business ...; the provision of employee benefits; and the tax treatment of the hired party.

Nationwide Mut. Ins. Co. v. Darden, 503 U.S.318, 323-24 (1992). Because those factors are more geared towards the independent contractor distinction, a fair amount of flexibility (or, at least, transparency) ought to be provided to volunteers before they sign up. Clarifying and confirming the fact they will not be compensated (or, if they are, that their compensation will be de minimis) will also help foreclose the chance that they become employees down the road. Likewise, getting an accurate acknowledgement of these things, one that confirms the charitable or otherwise non-pecuniary reason they are volunteering, is also an essential step in the process.

Because Title VII's "employee" definition is predominantly the same as other federal employment laws, Bryson will likely apply to them as well, opening the door for volunteers to claim many other protections in the workplace. All organizations, therefore, must mind the particulars of their relationships with these workers. While obtaining a signed (and accurate) acknowledgement of their status is important, treating volunteers with the same respect, fairness and equality afforded to employees is also critical in limiting potential liability. Harassment cases are, no doubt, the most likely battleground here, as volunteers can still recover significant compensatory and punitive damages despite suffering little to no economic loss. Minding these details, and affording everyone the same quality treatment regardless of whether they are on the payroll or not, is accordingly best way to avoid an unexpected lawsuit. It is also a great way to foster positive and effective volunteer relationships.

II. Black Swan - "Unpaid Interns" Potentially Entitled to Pay

On September 28, 2011, two unpaid interns for Fox Searchlight's production of Black Swan, a film that was nominated for five Academy Awards last yearand grossed $329 million, filed suit against the company alleging that its internship program violated the Fair Labor Standards Act ("FLSA"). See Glatt, et al. v. Fox Searchlight Pictures, Inc., Case No. 1:11-cv-06784-WHP (S.D.N.Y. Sep. 28, 2011). In essence, the plaintiffs claim that they, and approximately 100 others, were misclassified as interns and should have been paid according to the FLSA's minimum wage and overtime provisions. They are seeking class certification.

Under the FLSA, any employee of a business that affects interstate commerce (which is virtually everyone) must be paid minimum wage and overtime. Certain types of employees are exempt from this requirement, as long as they meet various conditions provided by the law. People often make the mistake of believing that interns qualify as one of these exempt classifications, but they do not. Instead, interns are not considered "employees" at all; they are mere trainees whose work at the employer's business is predominantly for their own benefit. See Walling v. Portland Terminal Co., 330 U.S. 148, 152-53 (1947). Employers who hire interns, therefore, are not required to pay them either minimum wage or overtime.

To help with the distinction, the Department of Labor ("DOL") has generated six factors that identify an intern:

  • The internship is similar to training which would be given in an educational environment or vocational school;
  • The internship experience is for the benefit of the intern;
  • The intern does not displace regular employees but works under the close supervision of existing staff;
  • The employer derives no immediate advantages of the intern, and on occasion, its operations may actually be impeded;
  • The intern is not necessarily entitled to a job at the conclusion of the internship; and
  • The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

U.S. Dep't of Labor, Wage & Hour Div., Fact Sheet #71: Internship Programs under the FLSA (http://www.dol.gov/whd/regs/compliance/whdfs71.pdf). Other factors come into play as well, such as whether the intern is engaged in a related academic program, receiving course credit for the internship, or working for faculty members who are also on staff with the employer. See Dixon, Brian R. & Levins, Alan S., "Interns: Employees or Not," California Lawyer, August 2008 (http://www.callawyer.com/cleStory.cfm?qVersionID=246&eid=895423&evid=1).

Litigation on these factors is limited, and examples show that Courts will consider, but not necessarily follow, the DOL's guidance. Compare McLaughlin v. Ensley, 877 F.2d 1207, 1209 (4th Cir. 1989)(finding an employment relationship by focusing only on "whether the employee or the employer was the primary beneficiary of the trainee's labor") with Reich v. Parker Fire Protection Dist., 992 F.2d 1023, 1029 (10th Cir. 1993)(finding that failure on just one of the six factors precluded a finding of an employment relationship).

With regard to the Black Swan case, the two named plaintiffs could not be more different. One was a "production assistant" whose primary duty was to get coffee and lunch for the staff, and the other was an MBA graduate, who performed a variety of accounting functions and prepared purchase orders for the film. If they are both certified as class representatives, and both ultimately judged to have been misclassified, the floodgates will open for unpaid interns across the country to seek compensation for their time in that role.

That is perhaps why their lawyers − a well-known firm with offices in New York, Chicago and Connecticut − have promised that more lawsuits over internship programs are going to be filed. These attorneys know that employers do not monitor the factors very closely, although countless of them have regular internship programs, many of which are unpaid. Violations could be widespread, meaning millions in judgments and settlements nationwide, often on a class-wide basis.

The FLSA isn't the end of the story either. As the Bryson case indicates, payment is only one indicia of employment under Title VII and other federal employment laws. While there is a strong precedent that unpaid interns are not employees under Title VII, that precedent appears to be eroding to a degree, albeit gradually. Compare O'Conner v. Davis, 126 F.3d 112, 115-16 (2nd Cir. 1997)(requiring payment to find an employment relationship) with Bryson, 2011 WL 3873789 at *5-6;1 Marvelli v. Chaps Community Health Ctr., 193 F.Supp.2d 635, 659 (E.D.N.Y. 2002)(noting that expectations of future employment could create standing to sue under Title VII for unpaid interns).

In light of this increase in potential liability, and the increased attention plaintiffs' firms are giving to it, employers would be wise to reassess their internship programs to ensure compliance with the DOL's six factors. Carefully controlling the provision of any economic benefit is essential to the process, and no promises of future employment should be made. Also essential is the basic requirement that all internship programs must be designed to benefit the intern, not the employer. Failure in that regard will virtually assure employee status.

III. Conclusion

The moral of the story here is simple: employers cannot limit their workplace liabilities to the folks who are on the payroll. They can, however, navigate the issue by paying attention to all the buoys that have been placed in the water. Following the DOL's factors, in addition to whatever factors are utilized by your circuit's employment test, is the best way to obtain certainty and avoid an unexpected lawsuit. With the right amount of care and commitment, perception and reality about who you employ, and who you do not, can be the same thing.


1 See also Haavistola v. Cmty Fir Co. of Rising Sun, Inc., 6 F.3d 211, 221 (4th Cir. 1993)(holding volunteer firefighter with very limited economic compensation to be an employee under Title VII).