Commentary
Employees are entitled to many benefits, including minimum wage, overtime wage, social security tax contributions, insurance (disability, unemployment), Family and Medical Leave and workers’ compensation. Interns generally do not receive benefits, nor are they paid. Accordingly, some businesses have relied on interns as a source of free labor. The businesses exploiting interns typically claim that they are providing the interns with intangible benefits such as access to high-level professionals, practical experience and resume value. The interns respond that they are performing tasks for which they should receive compensation. Interns have generally lost this battle.
All that could change, based on the decision of the US Court of Appeals for the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc., also known as the “intern case.” The plaintiffs were college graduates working as interns for Fox Searchlight. Several worked well over 40 hours per week, and all of them performed tasks typically associated with entry-level paid positions. They argued that they were “employees” under the Fair Labor and Standards Act [PDF] (the “FLSA”), and must be compensated for the work they performed.
The FLSA itself was of little assistance in the case, as it defines employees as, “individual[s] employed by an employer,” and “employ” as “to suffer or permit to work.” 29 U.S.C. § 203. Rather, the plaintiffs relied on the Department of Labor’s six-factor test to determine whether a worker is an intern or employee. Applying the DOL’s six-factor test, the US Court for the Southern District of New York ruled in favor of the plaintiffs’ motion for summary judgment, finding that they had been improperly classified as unpaid interns rather than employees. Fox Searchlight appealed, and the Second Circuit granted its petition for leave to file an interlocutory appeal from the district court’s order.
The court noted that the DOL’s six-factor test is outdated and based on apprenticeship programs that are not relevant to the issue at hand. “The purpose of a bona-fide internship is to integrate classroom learning with practical skill development in a real-world setting,” the court held. Accordingly, the court displaced the DOL’s six-factor test with its own factor-based, non-exhaustive test. Courts should consider the following:
(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 noted that no one factor is dispositive and that courts may consider relevant evidence beyond the specified factors in appropriate cases. Because the district court only considered the DOL’s six-factor, outdated test, the court vacated the district court’s decision in favor of the plaintiffs’ motion for summary judgment and remanded for further proceedings.
The court’s new factor-based test has serious implications for employers. Conducting business as usual and hiring an unpaid intern to perform various tasks is no longer an option. Companies must now carefully review the court’s seven-factor test. For instance, companies must diligently insure that tasks delegated to interns are educational in nature and not exploitative at all. Moreover, companies must understand that complying with the seven factors might not be enough, as the court noted that the list is non-exhaustive.
Overall, the court’s attempt to help unpaid interns avoid exploitation while working for free might come to hurt interns. Employers attempting to comply with the seven-factor, non-exhaustive test may find themselves going out of the way to create tasks for interns to complete. Moreover, they might fear liability. Thus, employers may shut down their internship programs and avoid all potential legal complications.
Before attending law school, I worked as an unpaid intern in the entertainment industry. My job began just as the district court ruled for the plaintiffs’ in the Fox Searchlight case were employees misclassified as interns. Accordingly, the company bent over backwards to ensure the interns were not given any work that may be construed as “displacing the work of paid employees.”
My supervisor would spend hours attempting to create projects for the interns, all of which were unnecessary to the company and made up solely for our benefit. The result was that the interns did not feel like part of the team, and the regular employees did not view us as valuable.
Harrison Thorne is a third year law student at UCLA Law. He currently serves as the Editor-in-Chief for the Entertainment Law Review. He worked in the Superior Court of California Los Angeles County, the US Bankruptcy Court for the Central District of California and the Labor and Employment group of a law firm.
Suggested citation: Harrison Thorne, Intern Protection Laws May Be Hurting Interns, JURIST – Student Commentary, September, 15, 2015, http://jurist.org/dateline/2015/09/harrison-thorne-intern-protection.php.
This article was prepared for publication by Marisa Rodrigues, a Staff Editor for JURIST Commentary. Please direct any questions or comments to him at commentary@jurist.org
