Second Circuit Critical of DOL Test in Pending Unpaid Intern Cases

Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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Glatt et al. v. Fox Searchlight Pictures Inc., No. 13-4478 (2d Cir.) and Wang et al. v. The Hearst Corp., No. 13-4480, (2d Cir.): On January 30, 2015, the Second Circuit Court of Appeals held oral arguments in two closely followed class actions involving unpaid interns. As we covered in the June 2013 and September 2013 issues of the New York eAuthority, the Glatt and Wang decisions are the leading internship misclassification cases in the Second Circuit Court of Appeals. During oral argument, the panel—consisting of Judges Richard Wesley, John Walker, and Dennis Jacobs—was openly critical of the U.S. Department of Labor’s six-factor test for determining whether the Fair Labor Standards Act’s (FLSA) minimum wage and overtime requirements apply to interns. Instead, the panel seemed more favorable toward a “totality of the circumstances” analysis, which would allow courts to balance the primary benefits derived by the employer and the intern.

Although the panel seemed to agree that the six-factor test was overly rigid, it also appeared to reject that “learning to work” was a sufficient benefit derived by interns to consider them exempt under the FLSA. Further, although the plaintiffs argued in favor of the six-factor test, they maintained that they would also prevail under a primary benefits analysis. In response, the panel expressed some concern that the plaintiffs in both cases were advocating for a position that could lead to the end of all internships. Indeed, the Second Circuit’s decision in these cases will likely have broad implications for the future of unpaid internship programs. We will continue to monitor these cases. In the meantime, given the high volume of complaints filed in New York courts involving unpaid interns, employers should carefully consider whether their internship programs comply with wage and hour laws. 

NOTE: This article was published in the February 2015 issue of the New York eAuthority.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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