As we previously reported here, the U.S. Court of Appeals for the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc. held that an individual is properly classified as an unpaid intern where he or she “is the primary beneficiary of the relationship.” Under this test, an intern need not be compensated where the intern receives tangible and intangible benefits that are greater than the intern’s contributions to the employer’s operations. In making this determination, a court may look to factors such as the type of training received, the relevance of the internship to the intern’s formal educational program, and the extent to which the intern’s work accommodates the intern’s academic commitments, among other factors.
Applying this test in Wang v. Hearst Corp., No. 12-cv-0793 (JPO), 2016 WL 4468250 (S.D.N.Y. Aug. 24, 2016), Judge J. Paul Oetken of the Southern District of New York held that none of the interns who worked at Hearst Corporation were “employees” under either the Fair Labor Standards Act or New York Labor Law. In reaching this conclusion, Judge Oetken noted that the interns worked for academic credit in a manner that accommodated their academic schedules. Further, it was mutually understood by the parties from the onset that the internships would be unpaid. Rather, the interns gained practical skills and received hands-on training that exposed them to the inner workings of their chosen industry. Although Judge Oetken acknowledged that the interns engaged in a certain amount of rote work that employees typically would not perform, this ultimately did not sway the analysis. According to Judge Oetken, the interns were the primary beneficiaries of the relationship, and thus granted Hearst’s motion for summary judgment on all claims.
This case is among the first applications of the 2nd Circuit’s “primary beneficiary” standard, and illustrates the high bar it poses to unpaid interns seeking minimum wage and overtime protections. If this case is any indication, unpaid internships will continue to be a viable option for employers – at least in the Second Circuit, as this Circuit has clearly affirmed its commitment to permitting such work arrangements – even extending its analysis of the primary beneficiary test equally to the interns’ claims under both the FLSA and NYLL.