On July 2, 2015, in Glatt, et al. v. Fox Searchlight Pictures, Inc., the Second Circuit overturned the trial court’s orders granting summary judgment and class certification to unpaid interns who claimed they should have been classified as employees and paid minimum wages and overtime under the FLSA and New York Labor Law.
The trial court had granted Plaintiff’s motion for summary judgment and certified a class based, in part, on a 2010 Department of Labor fact sheet enumerating factors for determining an employment relationship. The DOL six-factor test is a distillation of the U.S. Supreme Court’s analysis in Walling v. Portland Terminal Co., 330 U.S. 148 (1947) discussing unpaid railroad brakemen trainees.
The Second Circuit rejected this analysis and, in so doing, articulated the following non-exhaustive factors related to the “primary beneficiary test” which courts must consider when determining the legality of any one unpaid internships:
- Expectation of compensation, express or implied;
- Training similar to that which would be given in an educational environment;
- Whether the internship is tied to the intern’s formal education program;
- Whether the internship accommodates the intern’s academic commitments;
- Beneficial learning in limited duration;
- Whether the intern compliments or displaces paid employees;
- Whether the intern is entitled to a paid job at the conclusion of the internship.
Under this standard, an employment relationship is only created when the tangible and intangible benefits provided to the intern are greater than the intern’s contribution to the employer’s operation. No one factor is dispositive but and Courts should weigh and balance all of the relevant circumstances. The Court remanded the case to the trial court to apply this test.
On the question of class certification, the Court held that “the question of an intern’s employment status is a highly individualized inquiry.” For instance, the Plaintiff’s “common” evidence will not help answer whether a given internship was tied to an education program, whether and what type of training the intern received, whether the intern continued to work beyond the primary period of learning, or the many other questions that are relevant to each class member’s case. And, even if the Plaintiffs established that Fox had a policy of replacing paid employees with unpaid interns, it would not necessarily mean that every Fox intern was likely to prevail on her claim that she was an FLSA employee under the primary beneficiary test.