The Second Circuit Court held that unpaid interns at a for-profit employer are NOT employees under the Fair Labor Standards Act (FLSA) and thus, NOT entitled to compensation for services provided. Glatt v. Fox Searchlight Pictures, Inc., Nos. 13-4478-cv, 13-4481-cv (2d Cir. July 2, 2015); Wang v. Hearst Corp., No. 13-4480-cv (2d Cir. July 2, 2015).

The interns wanted the Court to adopt a test granting them employee status whenever the employer receives an immediate advantage from their work. The employers, on the other hand, urged the Court to adopt a nuanced primary beneficiary test that was not so rigid. The Second Circuit rejected the test advocated by the Plaintiffs sided with the employer, holding “the proper question is whether the intern or the employer is the primary beneficiary of the relationship.” The Court identified two salient features of the test. First, it “focuses on what the intern receives in exchange for his work;” second, it “accords courts the flexibility to examine the economic reality as it exists between the intern and the employer.” The Court identified the following non-exhaustive set of considerations, none of which alone is dispositive and all of which must be weighed and balanced:

  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 education 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.

(Courtesy of Noel P. Tripp)