Former interns used to get revenge against their employers by writing tell-all blog posts and memoirs. Now, they’re lending their names to plaintiffs’ lawyers, who then file wage-and-hour class or collective actions alleging that interns must be paid like hourly employees.
The unpaid internship is among the hottest areas in wage-and-hour litigation. Two of the more noteworthy cases—that so far have come out in opposite ways—are currently pending in the Southern District of New York: Glatt v. Fox Searchlight Pictures and Wang v. Hearst Corporation (pdf).
In Fox Searchlight, former interns from the film Black Swan alleged that they had been misclassified and should have been paid as “employees.” Judge William Pauley held that the interns were employees and, therefore, Fox Searchlight was liable for violating minimum wage and overtime laws. The court also granted the interns’ motion for class certification.
By contrast, in Wang v. Hearst Corp., Judge Harold Baer denied the plaintiffs’ motions for summary judgment and class certification. Judge Baer found that a genuine issue of fact existed as to whether the interns were employees and that a determination of liability would require individual analysis of what the interns did and what benefits they received.
Last month, the Second Circuit granted interlocutory review of both decisions. The Second Circuit’s ultimate rulings should provide employers with further clarity concerning the law surrounding internship programs.
In the meantime, one (presumably unintended) effect of such lawsuits is to scare employers into shuttering their internship programs altogether in order to avoid the risks and costs associated with potential litigation. For example, after being targeted by a wage-and-hour class action, Condé Nast—of The Devil Wears Prada fame—recently discontinued its coveted internship program, which was famously a stepping stone into the publishing, fashion, and entertainment worlds.
Companies that do choose to continue their internship programs should confirm that they have properly classified their employees in compliance with the Fair Labor Standards Act and applicable state laws. Some employers may assume that the classification (such as exempt, independent contractor, or unpaid intern) that they give to an employee is determinative. But it turns out that courts generally give little weight to an employer’s classification.
Where should employers look? In the context of determining whether a person may be properly considered to be an unpaid intern, the Department of Labor recommends (pdf) that courts consider:
- whether the internship is similar to training which would be given in an educational environment;
- whether the internship experience is for the benefit of the intern;
- whether the intern displaces employees;
- whether the employer that provides the training derives any immediate advantage from the activities of the intern;
- whether the intern is entitled to a job at the conclusion of the internship; and
- whether the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
Companies that have been threatened with (or are already facing) a wage-and-hour lawsuit on behalf of interns may try to use the case-by-case, individualized nature of the Department of Labor’s multi-factor balancing test to defeat certification of any putative class or collective action. Interns at the same company often have very different experiences, depending upon their duties and the employees who are supervising them. Those differences could derail class or collective treatment in a particular lawsuit.
Companies may also consider asking Congress to take an interest. It turns out that, under the relevant law and regulations, Congressional interns are excluded from the FLSA’s coverage (and so the government is spared similar class actions.) Many Hill interns have described their unpaid experiences as extraordinarily valuable; perhaps the same logic might apply in the business context.
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