In Glatt v. Fox Searchlight Pictures (decided July 2, 2015), the Second Circuit addressed a question of first impression in this Circuit, namely, when an unpaid intern is entitled to compensation as an employee under the Fair Labor Standards Act (FLSA).
In this case, unpaid interns working on the Fox Seachlight-distributed film Black Swan or at Fox’s corporate offices in New York City, claim compensation as employees under the FLSA. The district court granted partial summary judgment to interns Glatt and Footman, concluding that they had been improperly classified as unpaid interns rather than employees.
The Second Circuit vacated that decision, finding that the lower court applied the incorrect standard.
Specifically, the court rejected the Department of Labor’s six-factor test laid out in its Intern Fact Sheet, and instead agreed with defendants that “the proper question is whether the intern or the employer is the primary beneficiary of the relationship.”
In making this determination, the court identified a non-exhaustive set of seven considerations to be weighed in light of all the circumstances. The court stated:
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.
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.
The court was careful to note that “[a]pplying these considerations requires weighing and balancing all of the circumstances”, that “[n]o one factor is dispositive and every factor need not point in the same direction for the court to conclude that the intern is not an employee entitled to the minimum wage”, and that “courts may consider relevant evidence beyond the specified factors in appropriate cases.”