The most comprehensive resource available for payroll professionals. This service provides payroll news, white papers, custom research answers, webinars on the hottest payroll topics, survey and research reports, in addition to access to Bloomberg BNA’s Payroll Library™.
A preliminary settlement reached July 12 by Fox Searchlight Pictures Inc. and 640 interns is to deny the federal judiciary an opportunity to implement an intern compensability test that it developed in response to the case.
A federal district court determined in 2013 that some of the interns should have been compensated based on a six-factor test the Labor Department released in 2010, but the Second Circuit Court of Appeals in 2015 said that test was too rigid. The appeals court developed a seven-factor test that examines whether an intern or employer is the primary beneficiary of the intern's work and asked the district court to use the seven-factor test when reconsidering the case. The settlement, if approved, would cause the compensability issue to be unresolved in this case ( Glatt v. Fox Searchlight Pictures Inc., S.D.N.Y., No. 1:11-cv-06784, motion for preliminary settlement approval 7/12/16 ).
The Labor Department determined that an intern would not be engaged in an employment relationship if all six factors of its test characterized the internship. However, the district court determined that an intern could be unpaid if some of the six factors characterized the internship and the factors in favor of unpaid status qualitatively or quantitatively outweighed factors in favor of paid status. The appeals court's seven-factor test, in addition to examining primary beneficiary status, involves determining the degree that an intern functions akin to an employee performing productive work and weighing factors indicative of compensable status against factors that suggest noncompensable status.
The settlement would provide $276,600 to the class of interns.
While the seven-factor test was not used in Glatt, the test had its first use in March 2016 when it helped resolve a case involving interns and another media company ( Mark v. Gawker Media LLC, 2016 BL 97757, S.D.N.Y., No. 1:13-cv-04347, 3/29/16 ).
In that case, which like Glatt was considered in the Second Circuit, the court used the seven-factor test to find that an intern for Gawker Media LLC was not owed wages. The court found with the test that the intern was not owed wages because he “traded his labor for significant vocational and educational benefits, and these benefits outweighed those received” by the company as to his “work and the ability to evaluate him for future employment.”
The Eleventh Circuit Court of Appeals adopted the seven-factor test in September 2015 and asked a federal district court to use it when reconsidering an internship case ( Schumann v. Collier Anesthesia P.A., 2015 BL 294459, 11th Cir., No. 14-13169, 9/11/15 ). However, the district court has not yet completed reconsideration, so the test has not been applied to the case.
As the Second and Eleventh Circuits use the seven-factor test but other federal appeals courts use different tests for resolving internship compensability, the discrepancies add to payroll complexity.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)