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Monday, July 06, 2015

Unpaid interns may be deemed employee depending on the beneficiary of their services



Unpaid interns may be deemed employee depending on the beneficiary of their services
Glatt et al. v. Fox Searchlight Pictures, Inc. et al., USCA, 2nd Circuit, #13-4478

In a class action brought by unpaid interns claiming compensation as employees under the Fair Labor Standards Act [29 USC 207-06] and New York Labor Law [§652], the Circuit Court of Appeals said that when determining when is an unpaid intern entitled to compensation as an employee under the FLSA, the proper question is whether the intern or the employer is the primary beneficiary of the relationship.

The U.S. Department of Labor Division of Wages and Hours Fact Sheet #71 addresses Internship Programs under the Fair Labor Standards Act. This fact sheet provides general information to help determine whether interns must be paid the minimum wage and overtime under the Fair Labor Standards Act for the services that they provide to “for-profit” private sector employers.

Interns in the “for-profit” private sector who qualify as employees rather than trainees typically must be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek

However interns who receive training for their own educational benefit may not fall within the ambit of the FLSA if the training meets certain criteria.  The determination of whether an internship or training program meets this exclusion depends upon all of the facts and circumstances of each such program.

Fact Sheet #71 states that the following six criteria must be applied when making this determination:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of the factors listed above are met, an employment relationship does not exist within the meaning of the FLSA, and the Act’s minimum wage and overtime provisions do not apply to the intern.  This exclusion from the definition of employment is necessarily quite narrow because the FLSA’s definition of “employ” is very broad.

Fact Sheet #71 is posted on the Internet at:

The Circuit Court of Appeals decision is posted on the Internet at:

Handbooks focusing on State and Municipal Public Personnel Law continue to be available for purchase via the links provided below:

The Discipline Book at http://thedisciplinebook.blogspot.com/

A Reasonable Penalty Under The Circumstances at http://nypplarchives.blogspot.com

The Disability Benefits E-book: at http://section207.blogspot.com/

Layoff, Preferred Lists at http://nylayoff.blogspot.com/

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