The Second Circuit Weighs In on Unpaid
On July 2, 2015, the United States Court of Appeals for the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc., closely examined the law governing unpaid interns. The Court adopted a new approach to determine whether an intern is actually an employee for purposes of the Fair Labor Standards Act. This approach examines whether it is the intern or the employer that is the primary beneficiary of the relationship.
The Court noted that unpaid internship programs can greatly benefit interns and also recognized that employers can "exploit unpaid interns by using their free labor without providing them with an appreciable benefit in education or experience." The Court enumerated a non-exhaustive list of factors to guide courts in determining whether a worker is an employee under the FLSA. These factors include:
Do the intern and the employer clearly understand that there is no expectation of compensation?
Does the internship provide training that would be similar to that which would be given in an educational environment?
Is the internship tied to the intern's formal education program by integrated coursework or the receipt of academic credit?
Does the internship accommodate the intern's academic commitments by corresponding to the academic calendar?
Does the intern's work complement, rather than displace, the work of paid employees while providing significant educational benefits to the intern?
Do the intern and the employer understand that the internship does not entitle the intern to a paid job at the conclusion of the internship?
The Court emphasized that this list is not exhaustive, that no one factor on the list is dispositive, and that courts may consider other, relevant evidence in reaching a conclusion. The Court explained that this approach was meant to "reflect a central feature of the modern internship - the relationship between the internship and the intern's formal education," and stated that "the purpose of a bona fide internship is to integrate classroom learning with practical skill development in a real-world setting."
Employers with unpaid interns would be wise to re-evaluate their programs against the new formula announced in Glatt to ensure that there is a strong connection between their program and the intern's formal academic experience so as not risk exposure under the FLSA. If you have any further questions, please contact Randi Melnick, firstname.lastname@example.org, Todd Parker, email@example.com, or Chaim Book, firstname.lastname@example.org