Last summer the Second Circuit issued an important decision that identified the proper test for determining whether an employer properly classified an individual as an unpaid intern. The decision was a victory for employers because the nature of the test required courts to utilize a highly-individualized analysis of each intern’s experience, and therefore, it did not necessarily lend itself to class action treatment. On rehearing, the Second Circuit has now amended this decision to clarify that the test is highly context-specific rather than dependent on the individualized experiences of each intern.
The Eleventh Circuit recently joined the Second Circuit in adopting the employer-friendly “primary beneficiary” test to determine whether unpaid interns are properly classified as employees under the FLSA. The Second Circuit’s June decision in Glatt v. Fox Searchlight Pictures, Inc. struck the first blow in this area, and the Eleventh Circuit’s recent decision in Schumann v. Collier Anesthesia, P.A. provides employers with additional momentum in deterring future unpaid intern lawsuits.
The Second Circuit struck a blow today to individuals pursuing collective/class actions alleging that unpaid interns should be classified as employees. The Court announced an employer-friendly test that asks who benefits more from the internship – if it’s the individual, then classification as an employee entitled to minimum wage and overtime is not necessary. The Court also threw out the lower court’s certification decision, finding that its new test required a highly-individualized look at each intern’s experience. The case is Glatt v. Fox Searchlight Pictures, Inc. Employers will largely welcome the decision, but we caution against claiming total victory just yet. We explain more fully below.