29th Jul 2015

In a prior blog post, I wrote about the case of Brown v. New York City Department of Education. In Brown, the United States Court of Appeals for the Second Circuit determined that a volunteer intern for a public school was exempt from coverage under the Fair Labor Standards Act (“FLSA”). In that blog post, I noted that unpaid internships have come under heavy scrutiny in recent years and that very same appellate court (the United States Court of Appeals for the Second Circuit) recently had occasion to take up yet another such case.

In Glatt v. Fox Searchlight Pictures, Inc., the court tackled the question of whether unpaid interns for movie and television production companies are covered by the FLSA. The district court, utilizing a six-factor test set forth by the United States Department of Labor in its Intern Fact Sheet, determined they were. The factors suggested by the Department of Labor are

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.

The Second Circuit rejected the district court’s use of the Department of Labor’s six-factor test, finding that said test was “too rigid” in its attempt to apply certain standards to all workplaces. Instead, the Second Circuit adopted the following seven-factor test:

1.  The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee – and vice versa;

2.  The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions;

3.  The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit;

4.  The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar;

5.  The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning;

6.  The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern; and

7.  The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Thus, the district court’s ruling that the unpaid interns were entitled to coverage under the FLSA was reversed and remanded for a new ruling by the district court using the seven-factor test instead of the six-factor test. It will be interesting to see how, if at all, the analysis and/or decision change as a result of the Second Circuit’s ruling.

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