The U.S. Court of Appeals for the Second Circuit, which covers New York, has just affirmed a trial court ruling that Hearst Communications interns need not be paid. The decision comes after a landmark 2016 ruling in a case called Glatt v. Fox Searchlight Pictures.
The interns had argued that the Fair Labor Standards Act defines interns as employees, who must be paid, unless the internship meets specific criteria. Those criteria essentially weighed whether interns were actually receiving a substantial educational benefit from their work or were mostly assigned busywork to free up the workload of paid employees.
Under the previous understanding of the FLSA’s treatment of internships, it seemed that internships would have to meet all of the criteria in order to qualify as educational, which is the reason that internships can be unpaid.
Since the Glatt case, however, the 2nd Circuit has held that internships can be unpaid as long as the intern is the primary beneficiary of the relationship.
Under the Glatt analysis, there are seven considerations to weigh:
- Whether the intern expected compensation
- How similar the internship is to a classroom training experience
- The relevancy of the internship to the intern’s major
- Whether academic accommodations were granted
- Whether the internship involved learning rather than simply working
- Whether the internship was expected to result in an offer of employment
- Whether the intern’s work complemented or merely replaced what employees would do
The trial court ruled in favor of Hearst on the first six factors and for the interns on the final one. The interns’ attorneys argued that the internship had to meet all seven criteria in order to be considered a legitimate unpaid internship. The 2nd Circuit said that, instead, the court should balance the totality of the circumstances in determining whether the employer or the intern was the primary beneficiary of the relationship.
Before Glatt was decided, the U.S. Department of Labor had read the FLSA as meaning that the employer could legally derive no material advantage from an unpaid intern’s work. In this case, the 2nd Circuit clarified that Glatt had intentionally ruled otherwise. Instead, the court held essentially that unpaid internships are legitimate as long as the balance of the advantage goes to the intern.
“It is a shame that some of the most prominent names in the fashion and media industries do not believe that interns who file their expenses, run their errands, and do a great deal of very useful work do not deserve to be paid a minimum wage,” said a member of the plaintiff’s legal team.
If you feel that your unpaid internship primarily benefits your company, we recommend reaching out to an attorney experienced with the FLSA.