Second Circuit Court of Appeals Rules That Hearst Interns Are Not Employees

In the recent decision of Wang v. Hearst Corp., No. 16-3302 (2d Cir. 2017), the United States Second Circuit Court of Appeals affirmed the lower court’s dismissal of claims filed by five participants in the Hearst Corporation’s internship program claiming minimum wage violations under the Fair Labor Standards Act (FLSA). The court held that the unpaid interns were not classified as employees of Hearst and were therefore not entitled to compensation for their internships under the FLSA.

The Court of Appeals analyzed all factors under the “totality of the circumstances” of the plaintiffs’ internships, applying the “primary beneficiary” test it set forth last year in Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528 (2d Cir. 2016).  Those non-exhaustive factors include: (i) whether the parties understand there is no expectation of compensation; (ii) whether the internship provides training similar to that received in an educational environment; (iii) whether the internship is connected to a formal education program or receipt of academic credit; (iv) whether the internship corresponds with the academic calendar, accommodating the student’s school commitments; (v) whether the duration of the internship is limited to the period in which the intern is provided with beneficial learning; (vi) whether the intern’s work displaces the work of paid employees; and (vii) whether the parties understand there is no entitlement to a paid job at the conclusion of the program.

In weighing all of these factors as applied to the plaintiffs, the court concluded that the unpaid interns were, in fact, bona fide interns and not employees of Hearst for purposes of the FLSA and New York Labor Law. The Second Circuit found that only the sixth factor (whether the intern’s work displaces the work of paid employees) was present, however it noted that this factor by itself is not dispositive. The court pointed out that “[it] is no longer a problem [in classifying an individual as an intern] that an intern was useful or productive.”