Did Interns Who Performed Productive Work Need to Be Paid?

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By Michael Trimarchi

“We're putting in a lot of time on these blogs,” said Dan, an intern at a media company. “I think we're doing as much work as the regular full-time employees.”

“Even though we're interns, we should be paid,” Ron said. “The company definitely benefits from our labor.”

FACTS: A New York media company published blogs about the media industry, with posts about news, technology and pop culture. The duties of two interns, who worked 20 to 24 hours a week, included researching, writing and editing blog posts that were published on the company's website.

The interns also promoted articles on social media websites, moderated comments and managed the online forum. The online community was integral to the employer's business model as an Internet publisher.

One of the interns, who was pursuing a journalism degree, worked at the company's New York office and received academic credit for his efforts. The other, who was pursuing a degree in political science with a minor in creative writing that was focused on journalism, worked remotely from Missouri and did not receive academic credit.

Under the internship program, interns generally were not paid, although there were exceptions.

The two interns filed a lawsuit in an effort to seek back wages on behalf of former interns. The lawsuit, a collective action, claimed that the employer did not pay, or had underpaid, numerous other interns, even though the content they produced generated significant revenue for the company.

ISSUE: Did the employer owe the interns wages under the Fair Labor Standards Act?

DECISION: The media company did not have to pay the interns, a federal district court ruled.

The interns traded their “labor for significant vocational and educational benefits” that resulted from their positions, the court said. The interns were not entitled to wages under the FLSA because they were the primary beneficiaries of the internships, it said.

The court applied the six-factor test adopted in Glatt v. Fox Searchlight Pictures Inc. (2d Cir., No. 13-4478-cv, 7/2/15).

In the case involving the intern bloggers, the factors were weighed to determine whether an intern or an employer was the primary beneficiary of the relationship.

Interns for an online media company wrote and edited blogs, and also promoted articles on social media websites.

The interns received mentoring that was not provided to employees who “were expected to already possess an advanced journalism skill set,” the district court said.

Diverting the mentoring editor from other tasks benefited the interns, not the employer, the court said. The interns, meanwhile, performed work that benefitted the employer. The mentoring they received was more like hands-on instruction at a journalism school, the court said.

Balancing the factors showed the practical experience the interns acquired outweighed the benefit that accrued to the company, the court said (Mark v. Gawker Media LLC, 2016 BL 97757, S.D.N.Y., No. 1:13-cv-04347, 3/29/16).

POINTERS: The ruling shows that unpaid internships should be structured with “mentoring and oversight in a constructive and educational way,” said Lawrence Peikes, an employment lawyer at Wiggin and Dana LLP. Meaningful oversight at the media company helped distinguish “between what the interns were doing and what the regular, paid employees were doing,” he said.

“The internship itself could be a hindrance to the efficient operations” of the media company, Peikes said.

The Second Circuit, in Glatt v. Fox Searchlight Pictures Inc., provided these nonexhaustive factors for courts to consider when determining the primary beneficiary, to the extent that:

•the intern and employer clearly understand that there is no expectation of compensation, with any promise of compensation, express or implied, suggesting that the intern is an employee, and vice versa;

•the internship provides training that would be similar to what would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions;

•the internship is tied to the intern's formal education program by integrated coursework or the receipt of academic credit;

•the internship accommodates the intern's academic commitments by corresponding to the academic calendar;

•the internship's duration is limited to the period that the internship provides the intern with beneficial learning;

•the intern's work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern and

•the intern and the employer understand that the internship is conducted without entitlement to a paid job at the end of the internship.

“Applying these considerations requires weighing and balancing all of the circumstances,” the court said. “No one factor is dispositive and every factor need not point in the same direction for the court to conclude that the intern is not an employee entitled to the minimum wage.”

For More Information

This analysis illustrates how courts resolve pay-related disputes. The names and dialogue are fictitious.

To contact the reporter on this story: Michael Trimarchi in Washington at mtrimarchi@bna.com.

To contact the editor responsible for this story: Howard Perlman at hperlmani@bna.com.