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Intern or employee?

they were "interns" or employees for purposes of the exemption from the Fair Labor Standards Act (FLSA). In situations like those involved in the case, employers must pay "employees" for the work they perform, including overtime when applicable. The interns claimed they should receive pay, as they were merely doing "general" work, often completely unrelated to their field of study.

In their case, the lower court used the Department of Labor six-factor test for determining if an intern should be paid which the Second Circuit rejected, and instead created its own set of factors. The court's test adds an educational element to the determination of whether the intern should be paid.

The non-exhaustive test created by the court added factors that would compare the training to that which would occur in an "educational environment" and if it was "tied to the intern's formal education program by integrated coursework or the receipt of academic credit."

The court also looked to whether the internship "accommodates" the interns academic coursework schedule and if it were limited in time to providing the intern with "beneficial learning."

Other factors include the recognition by both employer and intern that no pay is involved and that the work done by the intern does not "displace" the work of other paid employees.

The addition of the educational element is completely new. The only significant case law prior to this was a 1947 case involving railroad brakemen, and in the DOL test, educational quality did not factor.

It could be potentially a problem for interns, employers could "negotiate" with schools to provide some amount of credit for the internship, which could then absolve the employer from providing pay.

The "devil in the details" of this test will be how closely a court will inquire into the "validity" of the educational benefit once some educational institution approved the internship for credit.

Without this inquiry, courts could allow the current level of exploitation to continue unabated, especially with the new heightened requirement for "similarity" of educational component for class certification of potential class members.

Source: findlaw.com, "GLATT v. FOX SEARCHLIGHT PICTURES INC," United States Court of Appeals, Second Circuit, Nos. 13–4478–cv, 13–4481–cv, July 2, 2015

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