Authored by Adam Smiley

The wave of unpaid internship lawsuits is growing, as former interns have recently filed suit against a variety of corporations in the music, television, publishing, and fashion industries.  The sports world is also a target, as the Department of Labor is reportedly investigating the Miami Marlins and San Francisco Giants for FLSA violations related to their unpaid interns.

Just last week, the Supreme Court declined to review Kaplan v. Code Blue Billing, an Eleventh Circuit decision affirming that two unpaid interns were not “employees,” and thus not entitled to wages under the FLSA.  While Supreme Court guidance on this issue would have been helpful to employers on a topic characterized by a relative absence of case law, the recent growth of such cases means that the Court will likely weigh in eventually.

In Kaplan, the plaintiffs were enrolled as students in a training program, which also required them to participate in an externship.  They were not paid for their externship work, but later sought compensation, arguing that they were “employees” entitled to minimum wage.  The district court disagreed, and granted the defendant’s motion for summary judgment.  On appeal, the Eleventh Circuit applied the “economic realities” test and examined whether the plaintiffs’ work “confers an economic benefit on the entity for whom they are working.”

The court held that the defendant’s staff “spent time — away from their own regular duties — training Plaintiffs and supervising and reviewing [their] work.”  It thus concluded that the externs caused defendant’s business to “run less efficiently,” and that the business received little to no economic benefit from the externs’ work.  Accordingly, the externs were not “employees” under the FLSA.  The decision also examined the Department of Labor’s six-part test for determining whether or not an intern must be paid, and concluded that the externs were not entitled to wages.

This blog has previously reported on similar FLSA collective actions filed by former unpaid interns for Hearst, Fox Searchlight Pictures, and Hamilton University.  The Second Circuit will soon hear appeals in two of these cases: the Hearst plaintiffs’ appeal of the denial of class certification, and Fox Searchlight’s appeal of the decision granting summary judgment to the plaintiffs.  These decisions should help clarify the law in the Second Circuit, and may provide a roadmap for cases in other Circuits as well.

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