Unpaid Interns: The Second Circuit Amended its Opinion Following a Petition for Rehearing

Lucie Riviere

On July 8, 2015, in a post titled “Second Circuit Articulates New Test to Determine Whether Employers Need to Pay Their Interns,” The Harman Firm, LLP reported on the Second Circuit’s July 2, 2015 decision in Glatt v. Fox Searchlight Pictures, Inc., which established a new test to determine whether employers must pay their interns. On January 25, 2016, the Second Circuit amended that decision upon Plaintiffs’ petition for rehearing en banc. This new decision includes few but significant changes.

From September 2009 to August 2010, Plaintiffs Eric Glatt, Alexander Footman, and Eden Antalik worked for Defendants Fox Searchlight and Fox Entertainment Group, Inc. as unpaid interns. They bring claims against Defendants for failing to comply with the Fair Labor Standards Act and New York Labor Law by refusing to pay them the minimum wage and overtime pay. On February 15, 2013, Plaintiffs moved for summary judgment and class certification, among other things. On June 11, 2013, the district court rejected the “primary beneficiary” test, which focuses on what the intern receives in exchange for his work as compared with the benefit received by the employer, and instead followed the Department of Labor’s approach to determine whether unpaid interns in the for-profit private sector need to be compensated, granting Plaintiffs’ motion in part. Defendants appealed on the basis that the district court should have applied the “primary beneficiary” test. The Second Circuit agreed and vacated the district court’s decision, holding that the analysis of whether an intern is an employee and, therefore, covered by the FSLA, turns on “whether the intern or the employer is the primary beneficiary of the relationship.” To aid the analysis, the Second Circuit provided a list of “non-exhaustive factors.”

On August 14, 2015, Plaintiffs filed a petition for rehearing en banc, which requests that the Second Circuit hear the case before a panel of all active judges. Although en banc hearings ordinarily are not ordered, a case may be reheard en banc where the proceedings involves a request of exceptional importance. On January 25, 2015, the Second Circuit en banc introduced important changes to its original decision:

  1. The “primary beneficiary” question should not “be analyzed in the same manner as the standard employer-employee relationship because the intern enters into the relationship with the expectation of receiving educational or vocational benefits that are not necessarily expected with all forms of employment (though such benefits may be a product of experience on the job).”
  2. The intern inquiry is context specific and focus on programs rather than on “the experience of a specific intern.”
  3. This decision does not apply to training programs part of a job.
  4. The whole internship program may be considered regarding the suitability of a case for class of collective treatment.

This new decision is more favorable to Plaintiffs, giving them a new hope of receiving class status in the forthcoming district court decision.

If your employer does not pay you overtime or if you are not being compensated for your work, contact The Harman Firm, LLP.