In a significant victory for employers in the series of hotly contested cases regarding the status of interns, the Hearst Corporation successfully defeated class certification under the New York Labor Law. Xuedan Wang v. Hearst Corp., 2013 U.S. Dist. LEXIS 65869 (S.D.N.Y. May 8, 2013).
As important to wage/hour practitioners and employers as the Court's ruling on class certification (which cited Comcast) was Judge Harold Baer's rejection of Plaintiffs' proposed interpretation, in their summary judgment motion, of the seminal case concerning "trainees" under the FLSA, Walling v. Portland Terminal Co. 330 U.S. 148 (1947). Seizing upon particular language in the opinion, Plaintiffs urged that Hearst’s interns were employees under the FLSA if Hearst derived any "immediate advantage" from the purported work they performed. Judge Baer observed that "[a]lthough the Supreme Court held in Walling that the men in that case were not employees because the defendant railroads received 'no immediate advantage' from the trainees, it does not logically follow that the reverse is true, i.e. that the presence of an 'immediate advantage' alone creates an employment relationship under the FLSA." The Court also rejected literal application of the six-factor, conjunctive test set forth in Department of Labor guidance for establishing that an individual is a "trainee" excluded from minimum wage protection, adopting instead a more flexible "totality of the circumstances" analysis based on the "economic realities" of the arrangement, citing recent Second Circuit law. However, the Court stated that the Department of Labor’s view should be given significant consideration.
The Court’s practical view on the “intern” issue is encouraging to employers especially in light of the contrary or shifting Department of Labor positions on various issues. With that said, review of intern programs remains of paramount importance to employers with large unpaid intern populations.