Academic journal article Harvard Law Review

Employment Law - Fair Labor Standards Act - Second Circuit Crafts 'Primary Beneficiary' Test for Unpaid Interns

Academic journal article Harvard Law Review

Employment Law - Fair Labor Standards Act - Second Circuit Crafts 'Primary Beneficiary' Test for Unpaid Interns

Article excerpt

EMPLOYMENT LAW--FAIR LABOR STANDARDS ACT--SECOND CIRCUIT CRAFTS 'PRIMARY BENEFICIARY" TEST FOR UNPAID INTERNS.--Glatt v. Fox Searchlight Pictures, Inc., 791 F.3d 376 (2d Cir. 2015).

In the wake of the 2007-2008 financial crisis and recession, the market for unpaid interns has grown considerably. (1) Today, thousands of students spend their summers--and sometimes their semesters--working for no pay. Seeing internships as valuable learning experiences and even prerequisites to paid jobs in their industries of choice, (2) students with financial means forego paid jobs for unpaid positions with prestigious for-profit companies. (3) Students from less privileged backgrounds, meanwhile, are forced to choose between taking on additional loans and missing out on opportunities that may be necessary to secure their futures. (4) Commentators have noted that some of these unpaid internships may violate the Fair Labor Standards Act of 1938 (5) (FLSA), the United States' national minimum wage law. (6) In Glatt v. Fox Searchlight Pictures, Inc., (7) the Second Circuit held, on a question of first impression, that whether interns qualify as "employees" under the FLSA depends on whether they or the company that hired them is the "primary beneficiary" of their relationship. (8) Applying this new rule, the Glatt court overturned the district court's summary judgment ruling in favor of the plaintiff-interns and decertified the plaintiffs' class. (9) In so doing, the Second Circuit adopted a defensible means of determining which unpaid interns qualify as "employees," at least in light of the mixed case law in other circuits. However, in adopting the primary beneficiary test, the Glatt court created problems of fit with the rest of the FLSA.

Eric Glatt, Alexander Footman, and Eden Antalik worked for Fox Searchlight Pictures (Fox) as unpaid interns. (10) Glatt worked on the Fox-produced film Black Swan in the film's accounting department and then in postproduction, Footman worked in the Black Swan production department, and Antalik worked as a publicity intern in Fox's corporate headquarters. (11) All three were responsible for numerous administrative and clerical tasks. (12) On October 19, 2012, they filed a class action complaint in the Southern District of New York against Fox for "unpaid minimum wages and overtime for themselves and all others similarly situated." (13) Glatt and Footman ultimately decided to proceed as individuals and moved for partial summary judgment, claiming they were "employees" under the FLSA and the New York Labor Law (NYLL). (14) Antalik moved to certify a New York State class of interns under the NYLL and an opt-in national class under the FLSA. (15)

On June 11, 2013, the district court granted Glatt and Footman's motion for summary judgment, certified Antalik's New York class, and conditionally certified her national class. (16) The district court took note of the 1947 decision Walling v. Portland Terminal Co., (17) in which the Supreme Court found that certain railroad '"trainees' were not covered employees under the FLSA." (18) The district court then consulted a Department of Labor (DOL) fact sheet based on Portland Terminal, which enumerated six criteria for determining whether an intern is an employee. (19) The court decided the DOL fact sheet was entitled to persuasive deference. (20) It also rejected the primary beneficiary test--which other circuits already applied--as being "subjective and unpredictable" (21) and as having "little support" in Portland Terminal. (22) The district court then applied the DOL fact sheet's criteria to Glatt and Footman's case, finding that the first four criteria cut in favor of the interns (23) but the latter two cut in favor of Fox." Because the balance of the factors weighed in favor of finding that Glatt and Footman were employees, the district court found they "d[id] not fall within the narrow 'trainee' exception to the FLSA's broad coverage." (25) Next, the court found that Antalik's proposed New York class met Federal Rule of Civil Procedure 23's requirement that the party seeking certification show that "questions of law or fact common to class members predominate over any questions affecting only individual [class] members. …

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