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A non-exhaustive set of considerations to aid courts in determining whether an unpaid intern is an employee for purposes of the Fair Labor Standards Act should include: (1) The extent to which the intern and the 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.
Plaintiffs worked as unpaid interns either on the Fox Searchlight-distributed film Black Swan or at the Fox corporate offices in New York City. They contended that the defendants, Fox Searchlight and Fox Entertainment Group violated the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 206-07, and New York Labor (NYLL), N.Y. Labor Law § 652, by failing to pay them as employees during their internships as required by the FLSA’s and NYLL’s minimum wage and overtime provisions. The district court concluded that plaintiffs had been improperly classified as unpaid interns rather than employees and granted their partial motion for summary judgment.
Should “unpaid interns” be deemed as “employees” under the FLSA?
In determining whether an unpaid intern can be deemed as employee under the FLSA, the Court held that it was necessary to determine whether the intern or the employer was the primary beneficiary of the relationship. According to the Court, the primary beneficiary test has three salient features. First, it would focus on what the intern received in exchange for his work. Second, it would accord courts the flexibility to examine the economic reality as it existed between the intern and the employer. Third, it acknowledged that the intern-employer relationship should not be analyzed in the same manner as the standard employer-employee relationship because the intern entered into the relationship with the expectation of receiving educational or vocational benefits that were not necessarily expected with all forms of employment (though such benefits may be a product of experience on the job). Moreover, the Court listed a non-exhaustive set of considerations to aid courts in determining whether an unpaid intern was an employee for purposes of the Fair Labor Standards Act. According to the appellate court concluded that the district court’s order granting partial summary judgment to the plaintiffs should be vacate since the district court had limited its review to the six factors in DOL’s Intern Fact Sheet,