There has been a great deal of litigation recently regarding unpaid interns around the nation and in New York. One of these cases led to a recent decision by the Second Circuit Court of Appeals, where that court has fashioned a new test that can be used by the lower courts to determine if an unpaid internship violates the pay provisions of the Fair Labor Standards Act (FLSA).
The growth in the use of unpaid internships has been significant, as can be seen by the numbers involved in some of the cases. Some have achieved class certification and included thousands of interns within the class. The appeals court decision may make such large classes difficult for future litigation, as it creates a new requirement for class certification.
Internships seem like a good idea. Students are permitted to work in "the real world" and learn skills that will allow them to succeed in the business world upon their graduation. And some employers may have used them in that manner originally.
But then someone recognized that rather than having them work under the close supervision of a more experienced employee, and potentially lowering that employees' productivity, they could be put to work in simple, but necessary, entry-level jobs, needing little supervision and obviating the need for paid employees in those roles.
Of course, interns are not a charity, donating their time to a large corporation and they are not there to provide free labor for the employer. The Second Circuit has created a new, non-exhaustive, seven factor test that will distinguish between programs that provide education benefit to the interns from those that merely provide free labor to their employer.
At this point, it is unclear how well this test will work, and if it will protect interns from exploitation.
Source: newyorklawjournal.com, "When Are Interns Employees?" Thomas E. Chase, August 3, 2015