2nd Circuit Courts Recent Ruling on Unpaid Internships

Is New Ruling on Unpaid Internships Good or Bad?

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Just as we have felt that FLSA’s six prong test on unpaid internships wasn’t clear enough, last week the 2nd Circuit Court passed another ruling on unpaid internships (which actually reverses the outcome of Fox Searchlight Pictures 2013 lawsuit). It seems that a new “test” has been developed in evaluating internship programs, throwing out the previous FSLA 2010 six-prong test developed earlier. It is believed by some that this new test will not only protect students but will also allow them to get relevant work experience that will help them become successful in the field.

The new standards are focused more on the “primary beneficiary” of any internship and the ability to show the close relationship between a student’s academic program and future career goals to the actual internship they are doing. It also must be clear that the intern cannot take the place of an employer’s regular employee and that no promise be made by the employer for a guarantee of future employment with the company. It also must be made clear that the intern will not receive compensation for his/her internship.

New standards:

  1. Do the intern and the employer "clearly understand" that there is no expectation of compensation?
  2. Does the internship provide "clinical and other hands‐on training" like those provided by schools?
  3. Is the internship "integrated" into the intern's coursework or the receipt of academic credit?
  4. Does the employer accommodate the intern's academic commitments by corresponding to the academic calendar?
  1. Is the internship limited in time to the period in which the internship provides the intern with beneficial learning?
  2. Does the intern's work "complement, rather than displace" the work of paid employees?
  3. Do the intern and the employer understand that the intern is not entitled to a paid job at the conclusion of the internship?

    The new test actually recognizes that historically not all unpaid internships are bad. In fact, there are some benefits to doing unpaid internships, especially if you are seeking experience working for a non-profit. This new framework that businesses can rely on may be seen as a way that employers can create lawful internship programs that do not take advantage of student interns performing many jobs within an organization. The key is to maintain the educational aspect of internships and not get them mixed up with laws that really pertain more to employees than to the interns of any company.

    In the old “six prong test” one of the sticking points was that employers should receive no benefit from the work of the intern. Unfortunately, businesses were forced into providing tasks that really did not pertain to the running of the business; thus diminishing the type of work that interns were allowed to do.  As a detriment to interns, they were often forced into more menial tasks and not permitted to get the hands-on experience that would benefit them when they were looking for a future full-time job.

    On the other hand, for businesses who now may feel that that the unpaid internship standards have become more relaxed, it is safe to assume that other state and federal courts in other circuits may not deem to adopt or follow the new test.

    For example, in New York State they have created their own test for determining the status or workers of individual corporations.

    The 2nd Circuit Court did emphasize that not all of the above points need to be present in order to have a proper internship. It also stated that other factors may be relevant, depending on the specific nature of the experience.  This is not a one fits all type of decision. Employers that hire interns to do menial tasks, may have to re-think their internship programs.

    As we can see, there is still no easy answer. What corporations need to keep in mind is if their internship program is primarily based on providing a learning environment for students that is focused mainly on giving students an opportunity to gain the knowledge and skills required to be successful in today’s very competitive job market.

    One of the first things that employers look for in job candidates is if they have previous experience in the field. Consequently, students who don't participate in a robust internship or some other experiential learning type of experience may get put on the bottom of the pile since employers are seeking job candidates they feel have the most relevant experience in the field.

    Please visit, “Can We Win the War on Unpaid Internships?”

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