Unpaid internships historically have been used by employers to allow students to gain experience and potential entry into competitive industries. However, employers have been more and more hesitant to use unpaid interns since the U.S. Department of Labor’s 2010 issuance of Fact Sheet #71. The Fact Sheet sets forth six criteria that, according to the Labor Department, must be satisfied in order for a for-profit company to employ an intern without paying a minimum wage, including the controversial requirement that the employer “derives no immediate advantage from the activities of the intern.” DOL, Wage & Hour Div, Fact Sheet #71, Internship Programs Under the FLSA (April 2010), available at http://www.dol.gov/whd/regs/compliance/whdfs71.pdf.
In a highly publicized 2013 decision, a federal district court applied the Labor Department’s six-part test and ruled the company should have classified and paid a group of former interns who worked on the film “Black Swan” as employees. See Glatt v. Fox Searchlight Pictures, 293 FRD 516 (SDNY 2013). However, in two groundbreaking rulings this past July, the U.S. Court of Appeals for the Second Circuit declined to follow Fact Sheet #71 and instead applied a primary beneficiary test—i.e., whether the intern or the employer is the primary beneficiary of the relationship—to determine an intern’s employment status. And in September, the U.S. Court of Appeals for the Eleventh Circuit adopted the Second Circuit’s approach and rejected the Labor Department’s views as being inappropriate to an assessment of the “modern internship.” With these rulings, which now potentially open the door to certain unpaid internships, we have dedicated this month’s column to a review of current law on unpaid internships.
Second Circuit
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