The United States Court of Appeals for the Second Circuit recently established a new test to determine whether an individual should be classified as an intern, and thus not subject to the FLSA and local wage and hour law. Rejecting the test employed by the Department of Labor (which filed an amicus brief with the appellate court), the Second Circuit’s new test is less rigid and seems, at least at first blush, to give more weight to the educational component of a claimed internship. Glatt, et al. v. Fox Searchlight Pictures, Inc., et al., Nos. 13-4478-cv & 13-4481-cv; decided July 2, 2015.
In Glatt, the plaintiffs were unpaid interns who worked on the movie “Black Swan” and in Fox Searchlight’s New York offices. While plaintiffs were either in college or recent college graduates, their tasks generally involved administrative and clerical duties. Apparently unhappy with the fact that their unpaid internships were actually unpaid, they filed suit claiming violations of the FLSA and New York state wage law and also sought class certification. After discovery, the parties sought a determination from the district court as to plaintiffs’ employment status. The district court, adopting a slightly watered down version of the DOL test, ruled that the plaintiffs were, in fact, employees.
The Second Circuit took a different approach and established a “primary beneficiary” test whereby a court determines whether the intern or the employer is the primary beneficiary of the relationship. Noting that this new test “focuses on what the intern receives in exchange for his work” and the “relationship between the internship and the intern’s formal education,” the Second Circuit set forth a list of non-exhaustive factors to utilize:
- The extent to which the intern and the employer clearly understand that there is no expectation of compensation;
- 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;
- The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit;
- The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar;
- The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning;
- The extent to which the intern’s work complements, rather than displaces, the work of paid employees; and
- 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.
Noting that the new test is flexible and that no one factor should predominate, the Second Circuit remanded the case back to the district court for further proceedings.