Employment Law Daily Hearst interns reaped academic benefits, weren't 'employees' entitled to pay
Monday, August 29, 2016

Hearst interns reaped academic benefits, weren't 'employees' entitled to pay

By Lisa Milam-Perez, J.D. Applying the Second Circuit’s new test for determining whether interns are "employees" within the meaning of the FLSA, a federal district court in New York held a group of former magazine interns were not statutory employees. Dashing the interns’ hopes of recouping pay for their efforts under either the federal statute or New York Labor Law (NYLL), the court granted summary judgment in Hearst Corp.’s favor on their class claims for unpaid wages (Wang v. The Hearst Corp., August 24, 2016, Oetken, J. P.). One of the early cutting-edge cases seeking to challenge the "trainee" status of unpaid interns—in the New York media market, the natural epicenter of these intern cases—the interns’ FLSA claims had been conditionally certified as a collective action. However, the court denied their subsequent motion to certify a Rule 23 class under the NYLL, as well as their motion for partial summary judgment on the question whether they were "employees" under the FLSA and NYLL. The Second Circuit took an interlocutory appeal and, in Glatt v. Fox Searchlight Pictures, Inc., decided in tandem with the instant case, adopted a new "primary beneficiary" standard for when an intern is an "employee." The primary beneficiary test. Under the Second Circuit’s new standard, when the "tangible and intangible benefits provided to the intern are greater than the intern’s contribution to the employer’s operation," there is no employment relationship, and no compensation due. The test focuses largely on the benefits that accrue to the intern in exchange for his or her efforts; the "economic reality" of the relationships; and—the novel wrinkle in the analysis—whether the intern came in with "the expectation of receiving educational or vocational benefits that are not necessarily expected with all forms of employment." The appeals court also offered a list of "non-exhaustive factors" indicative of a true internship experience (none of which, alone, are dispositive), including: whether there is a clear understanding that there is no expectation of pay, or of paid employment after the internship concludes; whether the internship provides formal training similar to what might be provided in an educational environment; whether it is tied to a formal education program or earns academic credit; whether the internship period corresponds to the intern’s academic calendar and accommodates the intern’s academic commitments; and whether the work performed by the intern complements—rather than displaces—the work performed by paid employees and, simultaneously, provides a significant educational benefit. It’s a "totality of the circumstances" approach and, in the end, the intern bears the burden of showing that he or she is an "employee" under the statute. The test, applied. Resolving the case on remand, the district court concluded that most of the factors, evaluated one-by-one, weighed in Hearst’s favor as to the six remaining plaintiffs here (albeit to varying degrees). Through their duties at various magazines, the interns "learned at least some tangible skills in their internships, put those skills to use, and gained the intangible value of exposure to the practical realities of jobs in their respective fields," even if they would have liked their internships to have been more "substantive." For example, one plaintiff, despite her "rote duties" in the advertising department of Marie Claire magazine, nonetheless secured six academic credits for her work, completing the graduation requirements for her degree in visual merchandising. She also met with her supervisor twice a day or so, and conversed with bona fide magazine employees about their career paths "when they had time." She listed the internship on her resume, cited her internship supervisor as a reference, and conceded that the internship "carries some weight" on the job market. Another intern who, during her stint at Seventeen magazine, organized inventories of clothing, went on "‘runs’ to retrieve and return clothes samples, aided the magazine’s stylists, and "created weekly fashion invoice spreadsheets," wrote an academic paper about her experience and received college credit. And, although she complained she never had the chance to interact closely with employees and "shadow" them while they put the magazine together, she admitted that she learned about clothing pricing and "the work of a fashion magazine" during her time there. Such was the case, as well, with the other plaintiffs, who interned at Cosmopolitan, Harper’s Bazaar, and Esquire. Granted, two of the interns in particular engaged in "scut work" that seems to have displaced the work of paid employees to some extent, and a reasonable juror could find as much. But it was undisputed that each intern engaged in "complementary" work as well. Thus, this factor weighed only slightly in the plaintiffs’ favor. On the whole, though, the various factors set forth by the Second Circuit supported a finding they were not employees. Under the totality of the circumstances, then, the interns were not "employees" as a matter of governing law.

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