On July 2nd, the United States Court of Appeals for the Second Circuit issued its decisions in Glatt et al. v. Fox Searchlight Pictures, Inc. et al. and Wang et al.  v. The Hearst Corp., the two unpaid intern lawsuits heard in tandem by the court on January 30, 2015.  The court’s opinion in Glatt, and summary order in Wang, adopted the employer-proposed “primary beneficiary” test to determine whether an unpaid intern should be considered an “employee” under the Fair Labor Standards Act (“FLSA”) and New York Labor Law (“NYLL”) and thus entitled to compensation.

The court rejected the six-factor test promoted by the U.S. Department of Labor, and applied by the district court in Glatt, finding that it was “too rigid” and ill-suited to apply to the “particular facts [of] all workplaces.”  The “primary beneficiary” test examines “whether the intern or the employer is the primary beneficiary of the relationship.”  This test was preferred because “it focuses on what the intern receives in exchange for his work” and “accords courts the flexibility to examine the economic reality as it exists between the intern and the employer.”  This approach, the court remarked, “reflects a central feature of the modern internship—the relationship between the internship and the intern’s formal education,” as it recognizes the integration between the internship and classroom studies, as well as the receipt of academic credit.

In applying the “primary beneficiary” test, the court provided seven (7) factors, none of which is dispositive, to aid lower courts in examining the lawfulness of an unpaid internship.  These factors are not exhaustive, and a court may consider any other relevant factor; this requires “weighing and balancing all of the circumstances.”  The seven factors are set forth below:

  1. The extent to which the intern and employer clearly understand that there is no expectation of compensation.  Any promise of compensation, express or implied, suggests that the intern is an employee – and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.   

While the factors include several of the six factors previously urged by the DOL as relevant to the analysis, one previous requirement is excluded:  that 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.”  The exclusion of this factor was notable because it was the most difficult for any employer to satisfy in the context of an unpaid internship.  The court then vacated the district court’s ruling that Eric Glatt and Alexander Footman, former production interns on the Black Swan film, were “employees” and entitled to minimum wage, and remanded the decision to the district court.

In light of this new test, the court also vacated and remanded the Glatt district court’s Rule 23 class and FLSA collective certifications brought by Plaintiff Eden Antalik, a former corporate intern in Fox Searchlight’s New York Publicity Office.  Specifically, the court found that the Glatt district court “misconstrued” the Circuit’s standards to evaluate whether common questions predominate over individual ones under Rule 23(b)(3), and vacated the district court’s Rule 23 certification.  In this regard, the Second Circuit remarked that the “question of an intern’s employment status is a highly individualized inquiry,” and even if the district court properly found that “Fox had a policy of replacing paid employees with unpaid interns, it would not necessarily mean that every Fox intern was likely to prevail on her claim that she was an FLSA employee under the primary beneficiary test, the most important issue in each case.”

The court concluded in the same manner with respect to the FLSA conditional certification decision, acknowledging that the “proposed collective presents an even wider range of experience than her proposed class because it is nationwide in scope, rather than just limited to New York interns.”  The court found that under the standard it adopted, “courts must consider individual aspects of each intern’s experience” and “none of the common proof identified by Antalik and relied on by the district court, will address these questions.”  Indeed, the court concluded that “the plaintiffs in Antalik’s proposed collective are not similarly situated even under the minimal pre-discovery standard.”

In Wang, the Second Circuit, in a summary order, applied the same “primary beneficiary” test and affirmed the district court’s denial of Rule 23 certification, which was in accord with its decision in Glatt that the test for employment is a “highly individualized inquiry.”  The court also affirmed the district court’s denial of plaintiffs’ summary judgment motion, where the district court concluded that genuine issues of material facts prevailed when evaluating the question of whether several unpaid interns at Hearst were FLSA and NYLL “employees.”

These decisions established new law in the realm of unpaid internships, and provided explicit guidance to district courts in the Second Circuit as to how this test should be applied.  In addition, the decisions are important because the spate of unpaid internship lawsuits have all been brought as Rule 23 class and/or FLSA collective actions, and these decisions certainly suggest that classes and collectives will now be harder to certify.  The Second Circuit’s remark that the test is “highly individualized” casts doubt on whether district courts will certify Rule 23 classes under the “rigorous” standards set forth by the Supreme Court in Dukes and Comcast.  The court’s remark that Plaintiff Eden Antalik in Glatt failed to even satisfy the lower threshold for FLSA conditional certification is also noteworthy, and suggests that in evaluating unpaid internships, plaintiffs may have great difficulty meeting the “similarly situated” standard for FLSA certification.

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Photo of Elise M. Bloom Elise M. Bloom

Elise M. Bloom is widely hailed as one of the nation’s top employment lawyers and one of the most creative and effective discrimination wage and hour, class/collective action trial lawyers. She is particularly well-known for handling high profile, bet-the-company matters on behalf of…

Elise M. Bloom is widely hailed as one of the nation’s top employment lawyers and one of the most creative and effective discrimination wage and hour, class/collective action trial lawyers. She is particularly well-known for handling high profile, bet-the-company matters on behalf of significant national employers.

Elise is the former co-chair of Proskauer’s Labor & Employment Department, co-head of the Class & Collective Actions Group and previously served as a member of Proskauer’s elected Executive Committee for two terms.

With 30+ years in practice, Elise possesses extensive pre-trial and jury trial experience as well as conducting high-profile investigations. She has represented more companies in class actions challenging interns, trainees and volunteers than most others; this includes her precedent-setting win for Fox Searchlight Pictures in the “Black Swan” case. She also addresses a wider range of general employment issues through counseling and employer training programs.

A noted author and speaker on employment-related topics, Elise spearheads Proskauer’s annual Value Insights: Delivering Value in Labor and Employment Law survey. Elise has been recognized as one of the leading employment lawyers by several leading publications such as Chambers USA, Legal 500, New York Law Journal and Employment Law360, to name a few. She was recently recognized as “Labor & Employment Management Attorney of the Year” at Benchmark Litigation’s 2020 US Awards EAST. She has also been named “Best in Labor & Employment” at Euromoney’s Women in Business Law Awards Americas in 2018, 2017, 2016 and 2014. A client recently told Chambers USA, “She’s incredible. She has an intensity about her work and she knows how corporations work. To watch her in litigation is magic.”

Photo of Joshua Fox Joshua Fox

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several…

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several Major League Baseball Clubs in all aspects of the salary arbitration process, including the Miami Marlins, Boston Red Sox, Los Angeles Dodgers, Kansas City Royals, San Francisco Giants, Tampa Bay Rays and Toronto Blue Jays. In particular, Josh successfully represented the Miami Marlins in their case against All-Star Catcher J.T. Realmuto, which was a significant club victory in salary arbitration. Josh also represents Major League Baseball and its clubs in ongoing litigation brought by current and former minor league players who allege minimum wage and overtime violations. Josh participated on the team that successfully defended Major League Baseball in a wage-and-hour lawsuit brought by a former volunteer for the 2013 All-Star FanFest, who alleged minimum wage violations under federal and state law. The lawsuit was dismissed by the federal district court, and was affirmed by the U.S. Court of Appeals for the Second Circuit.

Josh also has extensive experience representing professional sports leagues and teams in grievance arbitration proceedings, including playing a vital role in all aspects of the grievance challenging the suspension for use of performance-enhancing drugs of then-New York Yankees third baseman Alex Rodriguez. Josh also has counseled NHL Clubs and served on the trial teams for grievances alleging violations of the collective bargaining agreement, including cases involving use of performance-enhancing substances, domestic violence issues, and supplementary discipline for on-ice conduct. He has played a key role in representing professional sports leagues in all aspects of their collective bargaining negotiations with players and officials, including the Major League Baseball, National Hockey League, the National Football League, Major League Soccer, the Professional Referee Organization, and the National Basketball Association,.

In addition, Josh has extensive experience representing clients in the performing arts industry, including the New York City Ballet, New York City Opera, Big Apple Circus, among many others, in collective bargaining negotiations with performers and musicians, the administration of their collective bargaining agreements, and in grievance arbitrations.

Josh also represents a diverse range of clients, including real estate developers and contractors, pipe line contractors, hospitals, hotels, manufacturers and public employers, in collective bargaining, counseling on general employment matters and proceedings before the National Labor Relations Board, New York State Public Employment Relations Board and arbitrators.

Josh has also recently served as an adjunct professor at Cornell University’s School of Industrial Labor Relations for the past two years, teaching a course regarding Major League Baseball salary arbitration.

Prior to joining Proskauer, Josh worked for a year and a half at the National Hockey League, where he was involved in all labor and employment matters, including preparations for collective bargaining, grievance arbitration, contract drafting and reviewing and employment counseling. Josh also interned in the labor relations department of Major League Baseball and at Region 2 of the National Labor Relations Board. He was a member of the Brooklyn Law Review and the Appellate Moot Court Honor Society and served as president of the Brooklyn Entertainment and Sports Law Society.

Photo of Mark W. Batten Mark W. Batten

Mark W. Batten is a partner in the Labor & Employment Law Department and co-head of the Class & Collective Actions Group.

Mark represents employers nationwide at all stages of complex employment litigation, including class and collective actions on wage and hour matters…

Mark W. Batten is a partner in the Labor & Employment Law Department and co-head of the Class & Collective Actions Group.

Mark represents employers nationwide at all stages of complex employment litigation, including class and collective actions on wage and hour matters and discrimination claims. Ranked by Chambers USA, Mark is hailed as “a fabulous lawyer, handling interesting and complex cases.” Clients “highly recommend him to anyone seeking litigation counsel in the Boston area,” as well as note “he is responsive, pragmatic and team-oriented, and offers excellent legal advice.”

He assists clients with all aspects of employment policies and practices, including hiring, termination, leaves, accommodation of disabilities, and other matters. Mark also handles diverse civil litigation, including litigation of noncompetition agreements, ERISA matters, discrimination and wrongful termination litigation in federal and state courts; proceedings before the Massachusetts Commission Against Discrimination; wage and hour matters; and labor arbitrations. He is also an experienced appellate attorney both in employment cases and other civil litigation, handling appeals at all levels in the state courts and in the United States Courts of Appeals.

Mark also has substantial experience with traditional labor matters. He regularly represents employers in a variety of industries, including a number of newspaper and media companies, in collective bargaining, practice before the NLRB, labor arbitrations, union organizing campaigns, and day-to-day advice on administration of collective bargaining agreements. He regularly advises clients in both union and non-union settings on diligence matters in corporate acquisitions and financings. He also has experience on behalf of securities firms in arbitrations before the NASD and NYSE of customer and employee complaints.

Mark also practices on behalf of newspapers and other media in newsroom litigation, including libel defense and representation of reporters under subpoena, and has substantial experience in litigation involving access to sealed records and judicial proceedings on behalf of media companies.

Before joining Proskauer, Mark was a trial attorney in the Civil Division of the U.S. Department of Justice in Washington, where he was lead counsel in major litigation for over two dozen federal agencies, ranging from the U.S. Air Force, the CIA, and the U.S. Secret Service to the Department of Housing and Urban Development and the National Endowment for the Arts.

Mark regularly writes and lectures on employment-related matters, including, for instance, MCLE’s Representing Clients Before the Massachusetts Commission Against Discrimination.

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Photo of Noa Baddish Noa Baddish

Noa M. Baddish is a senior counsel in the Labor & Employment Law Department. She is a member of the Sports, Employment Litigation & Arbitration, Class and Collective Action, Wage & Hour and Whistleblower & Retaliation Practice Groups.

Noa’s practice concentrates on all…

Noa M. Baddish is a senior counsel in the Labor & Employment Law Department. She is a member of the Sports, Employment Litigation & Arbitration, Class and Collective Action, Wage & Hour and Whistleblower & Retaliation Practice Groups.

Noa’s practice concentrates on all aspects of labor and employment law. Her employment litigation practice in state and federal courts includes class and collective actions and defending claims of discrimination, harassment, breach of contract and violations of wage and hour laws. Noa represents Major League Baseball and its clubs in an ongoing litigation brought by current and former minor league players who allege minimum wage and overtime violations. In addition, Noa has represented clients in the media and entertainment and fashion industries in lawsuits brought by unpaid interns in wage and hour disputes.

Noa also provides significant assistance on counseling matters on a wide array of issues for clients in various industries, including, but not limited to, sports, law firms, financial institutions, media and fashion.

Noa has been recognized as a Rising Star by New York Super Lawyers since 2015. She has authored and contributed to several articles and newsletters on employment and labor topics, including “State Whistleblowing Laws Provide Whopping Verdicts,” New York Law Journal (January 2014). Noa is also a frequent contributor to the Firm’s Whistleblower Defense blog.

Previously served as Assistant General Counsel to the New York City Mayor’s Office of Labor Relations, Noa defended the Mayor and City agencies against both employee grievances at arbitration and improper practice petitions before the Board of Collective Bargaining. Prior to that, she was a Law Clerk to Judge Ellen L. Koblitz of the Appellate Division of the New Jersey Superior Court.

While in law school, Noa served on the Executive Board as notes and articles editor of the Fordham Urban Law Journal.