{"id":24956,"date":"2015-09-29T00:05:12","date_gmt":"2015-09-29T05:05:12","guid":{"rendered":"http:\/\/law.marquette.edu\/facultyblog\/?p=24956"},"modified":"2015-09-29T11:10:12","modified_gmt":"2015-09-29T16:10:12","slug":"revisiting-the-treatment-of-unpaid-internships-under-the-fair-labor-standards-act","status":"publish","type":"post","link":"https:\/\/law.marquette.edu\/facultyblog\/2015\/09\/revisiting-the-treatment-of-unpaid-internships-under-the-fair-labor-standards-act\/","title":{"rendered":"Revisiting the Treatment of Unpaid Internships Under the Fair Labor Standards Act"},"content":{"rendered":"

The extent to which the Fair Labor Standards Act (FLSA) applies to internships and other similar training programs was one\u00a0of the cutting edge legal issues argued during last spring\u2019s Jenkins Honors Moot Court Competition<\/a>.\u00a0\u00a0In the\u00a0months since the\u00a0Jenkins Competition concluded, both the Second Circuit and the Eleventh Circuit have issued rulings that clarify\u00a0the legal issues addressed in the Jenkins Competition.\u00a0 The treatment of interns under the Fair Labor Standards Act\u00a0is\u00a0once again making news.<\/p>\n

The fictitious respondent in the Jenkins Competition was a law student who participated in an unpaid internship at a large, for-profit law firm.\u00a0 As part of this program, the student primarily worked on pro bono matters under the supervision of a senior attorney.\u00a0 The student was also able to participate in a mock trial and attend weekly training lunches.\u00a0 However, the student also volunteered to work on a number of projects that were not attached to any pro bono cases or training. \u00a0They were more of an administrative or secretarial nature. \u00a0After an unceremonious dismissal from the program (which was the basis for another\u00a0claim in the case), the law student brought a suit against the firm, claiming that she was owed compensation for the work she did under her summer internship program because she qualified as an employee under the FLSA.\u00a0 The law firm, as one would expect, challenged this assertion, claiming that the student fell under the \u201ctrainee\u201d exception carved out by the Supreme Court in Walling v. Portland Terminal Co.<\/em><\/a> (1947).<\/p>\n

The Court in Walling<\/em> clearly meant to provide an opportunity for individuals to be trained without pay by a for-profit business in an industry the individual\u00a0hoped to enter later.\u00a0 In its ruling, the Court ruled that the FLSA\u2019s definition of an employee as someone who is \u201csuffer[ed] or permit[ed] to work\u201d was \u201cobviously not intended to stamp all [working] persons as employees.\u201d\u00a0 The Court saw the benefit of internship programs for both those seeking to be trained as well as the businesses seeking to develop their future workforce; classifying all such individuals as employees under the FLSA, and thus requiring payment, would limit training opportunities and hurt both groups.\u00a0 The problem with the Court\u2019s ruling in Walling<\/em> is that it did not establish a clear\u00a0test for determining whether an individual is an intern or whether she is an employee covered by the protections in the FLSA.<\/p>\n

Without such guidance from the Supreme Court, lower courts were left to make their own determinations.\u00a0 Some followed a six-point test developed by the Department of Labor (DOL) titled \u201cFact Sheet 71.\u201d\u00a0 Strict adherence to this test made it difficult for an individual to be classified as an intern if she worked at a for-profit business.\u00a0 A \u201ctotality-of-the-circumstances\u201d approach, which abandoned the DOL\u2019s requirement that all 6 factors be met, sought to soften the strict application of Fact Sheet 71 by weighing all\u00a0six factors in a balancing test.<\/p>\n

Courts that did not apply the DOL six factor test, either in its strict all-or-nothing approach or in its tamer \u201ctotality-of-the-circumstances\u201d approach, instead adopted a \u201cprimary beneficiary\u201d test which looks at a number of considerations in order to determine which party\u2013the intern or the business\u2013is receiving the primary benefit of the internship program.\u00a0 This interpretation made it easier to classify work done as part of training programs at for-profit firms as an \u201cinternship\u201d and therefore not covered by the FLSA.<\/p>\n

Playing a\u00a0prominent role in the\u00a0Jenkin\u2019s Competition was Glatt v. Fox Searchlight, Inc.<\/a><\/em> (2013), a case out of the Southern District of New York.\u00a0\u00a0In Glatt<\/em>, a group of interns who had worked on the filming of the movie Black Swan<\/em> <\/a>brought suit against the movie\u2019s production company claiming that their work was that of an employee, and not an intern, and they were therefore owed back wages for their work.\u00a0 The district court applied the \u201ctotality-of-the-circumstances\u201d iteration of the DOL six-factor test, and granted the plaintiff\u2019s motion for summary judgment, ruling that Glatt<\/em> and his co-plaintiffs did not fall within the FLSA\u2019s unpaid trainee exception.\u00a0 As such, the court held that they should have been treated as employees.\u00a0 This decision was seen as being very \u201canti-employer\u201d and some feared that further adoption of this standard would severely curtail internship opportunities with for-profit companies.<\/p>\n

Fox Searchlight appealed the district court\u2019s ruling to the Second Circuit, and this past\u00a0July, the Second Circuit vacated the ruling of the Southern District of New York <\/a>and remanded the case to district court.\u00a0 The court held that the district court judge erred in applying the DOL\u2019s six-factor test, and that the appropriate test for determining whether someone falls within the unpaid trainee designation is the primary beneficiary test.\u00a0 The court specifically held that the DOL\u2019s six-factor test was too stringent (and, as mere administrative guidance, did not merit significant deference) and only the primary beneficiary test allowed for the nuance and individuality needed to accurately make such determinations.<\/p>\n

The Eleventh Circuit, following the lead of the Second Circuit, recently further solidified the argument that the appropriate test for determining whether an individual falls under the unpaid internship exception to the FLSA is in fact the primary beneficiary test.\u00a0 On September 11, 2015 in Schumann v. Collier Anesthesia<\/em><\/a>, the court rejected the district court\u2019s strict application of the DOL\u2019s six-factor test, vacating the lower court\u2019s decision and remanding the case for further action.\u00a0 Furthermore, the Eleventh Circuit Court provided guidance on how the lower court should implement the primary beneficiary test.\u00a0 In determining who received the greatest benefit from an internship program, the court adopted the wording of the Second Circuit by holding that such a determination should be made by looking at \u201ca non-exhaustive set of considerations.\u201d\u00a0 The Eleventh Circuit Court directed lower courts to, amongst other issues, consider the length of the internship program (to ensure that the length wasn\u2019t excessive and corresponded to the interns\u2019 academic calendar) and whether the work was exploitative (to ensure that interns did not replace other employees and were given significant guidance).\u00a0 The court acknowledged that \u201cmodern internships can play an important\u2013indeed critical\u2013role in preparing students for their chosen careers.\u201d<\/p>\n

Where do these recent court rulings leave us?\u00a0 The treatment of unpaid interns under the Fair Labor Standards Act — at issue in last spring’s Jenkins Competition — has been clarified.\u00a0 It appears that the primary beneficiary test is, and will be, the accepted method for determining whether an individual falls under the unpaid intern exception of the FLSA.\u00a0 In addition to the Second and Eleventh Circuits, this approach has also been adopted by the Fourth, Fifth, Sixth, Eighth, and Tenth Circuits.\u00a0 However, the application of the primary beneficiary test, seen as the more \u201cemployer friendly\u201d test, does not mean that interns have lost all protections afforded by the FLSA.\u00a0 Instead, the nearly universal adoption of a primary beneficiary test similar to the one spelled out in Schumann<\/em> will meet the needs of both employees and interns.\u00a0 Employer are able to develop a future workforce while also getting some benefit in the form of free labor.\u00a0 Interns have the opportunity to learn their future trade, develop valuable skills, and network with those already a part of their chosen profession. The courts are very clear that this test requires each individual case be examined with the closest possible scrutiny to ensure that an intern is truly getting a training experience that will further their professional growth.<\/p>\n","protected":false},"excerpt":{"rendered":"

The extent to which the Fair Labor Standards Act (FLSA) applies to internships and other similar training programs was one\u00a0of the cutting edge legal issues argued during last spring\u2019s Jenkins Honors Moot Court Competition.\u00a0\u00a0In the\u00a0months since the\u00a0Jenkins Competition concluded, both the Second Circuit and the Eleventh Circuit have issued rulings that clarify\u00a0the legal issues addressed 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