Employer Use of Unpaid Interns: Second Circuit Court of Appeals Rejects Department of Labor’s Restrictive Guidance and Endorses a More Easily Met Standard for Determining Lawful Use of Unpaid Interns

Sullivan & Cromwell LLP - July 6, 2015

On July 2, the U.S. Court of Appeals for the Second Circuit issued an opinion concerning when interns should be considered “employees” under the Fair Labor Standards Act (“FLSA”), and thus subject to provisions such as the minimum wage and overtime pay.  In Glatt v. Fox Searchlight Pictures, --- F.3d ---, Nos. 13-4478-cv, 13-4481-cv, 2015 WL 4033018 (2d Cir. 2015), the court rejected 2010 guidelines issued by the Department of Labor (“DOL”) that made the use of unpaid interns extremely difficult, and held that the primary question in determining whether an unpaid intern is an “employee” is whether it is the intern or the employer who receives the primary benefits of the relationship.  The court went on to suggest seven specific factors for making that determination.