On September 11, 2015, the Eleventh Circuit became the first appellate court to address the standard for lawful unpaid internships since the Second Circuit’s ruling in Glatt et al. v. Fox Searchlight Pictures, Inc. et al. (For more on Glatt, see our post here). The new decision adopts the Glatt test and reasoning wholesale, and provides helpful guidance on applying the Glatt factors. The case also strengthens the trend away from relying on the DOL’s Fact Sheet 71, which purports to provide restrictive guidance on unpaid internships.

The plaintiffs in Schumann v. Collier Anethesia were twenty-five former student registered nurse anesthetists (“SRNAs”) enrolled in a master’s program. As part of their academic program, and as required by Florida law, the SRNAs completed a clinical curriculum and participated in a minimum of 550 clinical cases. After completing their unpaid clinical program, the SRNAs brought suit against their college, the corporation with which they completed their clinical work, and individual directors of both. They alleged that through their clinical work they served as “employees” of the defendants for purposes of the FLSA and were entitled to wages and overtime pay.

The district court granted summary judgment for the defendants, finding that the SRNAs were not employees under the FLSA and thus not entitled to minimum wage or overtime. The SRNAs appealed, arguing, in part, that the district court erred by not following the DOL’s six-factor test.

Echoing the Second Circuit in Glatt, the Eleventh Circuit disagreed with the SRNAs and rejected the DOL’s six-factor test. As a threshold matter, the court noted that because the six-factor test is not a regulation it is only due deference “proportional to its power to persuade.” The court “[did] not find it persuasive.” Relying heavily on Glatt, the court characterized the six-factor test as too rigid and posited that “no circuit has accepted it wholesale [nor] deferred to the test’s requirement that ‘all’ factors be met for a trainee not to qualify as an ‘employee’ under the FLSA.”

Instead of the DOL’s test, the court endorsed the primary beneficiary test from Glatt, which calls for the evaluation of “a non-exhaustive set of considerations” which are helpful for determining the “primary beneficiary” of an intern’s work. The court then remanded the case to the district court so that it may apply the Glatt factors and permit the parties to supplement the record.

Beyond simply ordering the lower court to apply Glatt, the Eleventh Circuit provided guidance on applying some of its factors. Concerning the duration of internships, the court suggested that “designing an internship is not an exact science” and that “an internship that is longer than absolutely necessary to accomplish the educational and experiential goals of the program does not necessarily weigh in favor of a determination that the intern is an ‘employee’.” Instead, the court instructed, “the court should consider whether the duration of the internship is grossly excessive in comparison to the period of beneficial learning.”

Additionally, the court discussed Glatt’s suggestion that judges evaluate the extent to which an intern’s work displaces the work of paid employees. The court opined that judges should consider how external rules come into play. For example, it found that the fact that Medicare permits one supervising anesthesiologist to work with two SRNAs shed some light on whether the clinical program at issue, which used the same ratio, was exploitative.

The court concluded by cautioning that employee status may not always be an all-or-nothing determination. In the event that an intern does some work that is for his primary benefit and some work that is not, it could be possible to classify him as an intern for some of the work and as an employee for the other.

The Second Circuit’s Glatt decision is persuasive authority in the largely uncharted waters of unpaid internships, and with Schumann its test becomes a more reliable guide for employers with these programs.