Seen most cynically, employers deploy the label “intern” to give the impression that worker protection laws do not apply to people who look very much like workers, relying on financial and organisational barriers which prevent interns launching court challenges. A string of recent lawsuits brought by interns in New York marks a bold attempt to break through those barriers, with extremely high stakes for interns and their users.
In June 2013 in Glatt v Fox Searchlight Pictures, a US District Court found that interns on two film production crews were “employees” under the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL), entitling them to be paid a minimum wage. The key question was whether the claimant interns fell within the “trainee” exception to “employee” status previously established by the U.S. Supreme Court in Walling v Portland Terminal Co.
In deciding that they did not, Judge Pauley refuted the idea – favoured by the US Court of Appeals (6th Circuit) in Solis v Laurelbrook Sanitarium (2011) – that the ultimate inquiry in this context was which party derived the “primary benefit” from the arrangement. The judge stated that an assessment of all the circumstances was needed, but he in fact placed great (if not exclusive) emphasis on six factors identified in a progressive US Department of Labor “Fact Sheet” in concluding that the claimant interns were employees. He emphasised in particular that the internship program was not constructed “for their benefit” (though they may have acquired useful knowledge incidentally); that they had completed tasks which would otherwise have fallen to regular employees; and that the employer obtained an immediate advantage from their work.
The Glatt decision undoubtedly marked a breakthrough for interns and their advocates, and sparked a flurry of intern-claimant lawsuits in summer 2013 leading one commentator to suggest that unpaid internships “may no longer be a viable option by the time summer 2014 rolls around”. This heady forecast seems a little premature since other District Court judges have taken a markedly different approach to Judge Pauley in Glatt. Most notably, in Wang v Hearst (2013), the judge dismissed an application for summary judgment in favour of interns seeking retrospective payment of the minimum wage. While also declaring that Walling required a focus on the “the totality of circumstances of the training program”, the judge paid far less attention to the USDOL Fact Sheet factors. The clearest break from the Glatt approachwas the judge’s insistence that interns could be trainees even where employers derived clear benefits from their work.
Both the Glatt and Wang courts certified their decisions for immediate appeal to the US Court of Appeals (2nd Circuit), which is currently considering whether to hear an appeal. While this would mark uncharted territory for the 2nd Circuit, there is considerable and conflicting jurisprudence on the interpretation of Walling from other Circuits. Any decision by the 2nd Circuit is highly unpredictable given the multi-factorial and open-ended tests for “employee” status. Using these tests, judges who are inclined to rock or not to rock the boat of unpaid internships have a myriad of ways to justify their preference. Thus the brave battle of New York’s intern claimants could ultimately demonstrate the usefulness of legal action as a tool for class advocacy: or, just as easily, generate an unwelcome appeal court authority to complicate their pursuit of a laudable political goal.
Finally, as the October 2013 decision in Wang v Phoenix Satellite Televisionillustrates, the inclination of a given judge is not the only arbitrary factor which can determine whether interns enjoy fundamental employment rights: another is the particular statutory source of the given right(s). The claimant intern, alleging sexual harassment against her employer, was rebuffed on the basis that under the NYC Human Rights Law, it was an essential condition of “employee” status that the individual had received remuneration. The judge emphasised that this was already “axiomatic” under the State Human Rights Law and Title VII of the Civil Rights Act 1964.
Unpaid interns are thus deprived of such important employment rights as those against discrimination and harassment on the remarkable basis that their users have decided to deprive them of another employment benefit, namely pay. While it is bizarre to see different rules applied to interpret the same concept of “employee” status, this highlights the true significance of the fate of Glatt and his co-claimants. If the 2nd Circuit rules in their favour, then interns will be encouraged to demand not only pay but various other rights which, following Phoenix Satellite, can only exist in a paid work relationship.
Darryl Hutcheon graduated in the BCL with Distinction in 2012 and is currently studying the BPTC in London. He participated in the formation of the International Coalition for Fair Internships, a multinational network of advocacy groups which seeks to challenge unpaid internships and improve rights for interns.
You cannot repeal the law of supply and demand.
Unpaid internships with no litigation risk provide experience which would not be provided on any other terms. What is the point of killing the goose which lays the golden egg?