Does an Intern Fall Under the Protection of the Fair Labor Standards Act?

The United States Second Circuit Court of Appeals is currently reviewing a pair of cases that address whether interns meet the definition of an employee under the Federal Fair Labor Standards Act (FLSA) that gives minimum wage protections to workers. The outcome of these appellate decisions may have substantial implications for businesses that utilize unpaid internships.

United States District Courts have disagreed regarding whether interns were employees under the FLSA.  In Xuedan Wang v. Hearst Corp., 2013 WL 1903787 (S.D.N.Y. May 8, 2013) motion to certify appeal granted, 2013 WL 3326650 (S.D.N.Y. June 27, 2013), the court concluded that interns were not defined as employees for the purposes of pursuing a class action. In contrast, the same District Court determined that movie production interns at Fox performed work similar to employees, such that they were analogous to employees for purposes of minimum wage protections under the FLSA.  Glatt v. Fox Searchlight Pictures Inc., 2013 WL 2495140 (S.D.N.Y. June 11, 2013) on reconsideration in part, 2013 WL 4834428 (S.D.N.Y. Aug. 26, 2013), motion to certify appeal granted, 2013 WL 5405696 (S.D.N.Y. Sept. 17, 2013).

Guidance from the Department of Labor

The primary guidance from the Department of Labor on this dispute was “Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act.” The fact sheet set forth six factors that must be met to qualify as an intern, not an employee. The criteria are as follows:

1. The internship, even though it includes actual operations of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

The United States District Courts applied these factors in two distinct ways. In the Wang v. Hearst Corp. decision, the District Court applied a “balancing of the benefits” framework; whereas, in the Glatt v. Fox Searchlight Pictures case, the Judge considered the totality of the circumstances as it applied the factors set forth by the Department of Labor. The resolution of the split decision of the United States District Courts by the United States Second Circuit Court of Appeals will provide important guidance to business owners regarding their policies for hiring interns. Ultimately, the critical point for businesses is to review their intern policies to comply with the factors set forth by the Department of Labor.

Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.