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Intern Beware

Submitted by Jill Yoshikawa, Ed M, Partner of Creative Marbles Consultancy on July 9th, 2015

As we recently posted, internships are becoming the new entry level jobs.  Although appealing to students hungry for future jobs, given today’s challenged employment outlook, not all internships are created equal.  The line between “employee” and “unpaid intern” needs to be carefully defined by both companies and student interns, in order to create a mutually beneficial and legal experience.  A Federal Appeals Court recent ruling broadened the definition of “unpaid intern,” as reported in the New York Times:

Employers have considerable leeway to use unpaid interns legally when the work serves an educational purpose…

The issue being contested in front of the Appeals Court was the difference between an “employee” and “unpaid intern”, after three individuals who had served as interns in the production of “Black Swan” sued Fox Searchlight pictures for violation of minimum wage laws and sought to be paid for their work.

The Federal Appeals Court’s decision overturned a previous ruling that the interns were entitled to be paid, and found that Fox Searchlight had violated Department of Labor rules.  Yet:

Writing for a three-judge panel of the United States Court of Appeals for the Second Circuit, Judge John M. Walker Jr. held that the Labor Department’s criteria were both out of date and not binding on federal courts.

Judge Walker and the Federal Appeals Court ruling established the following:

He argued that the proper way to determine workers’ status was to apply a “primary beneficiary test” — a concept proposed by Fox in which the worker can be considered an employee only if the employer benefits more from the relationship than the intern.

Further, the Federal Appeals Court’s ruling elaborated:

Judge Walker wrote that he and his fellow judges on the panel “agree with defendants that the proper question is whether the intern or the employer is the primary beneficiary of the relationship.”

 

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