Glatt v. Fox Searchlight Pictures, Inc.
25 Wage & Hour Cas. (BNA) 1716, 811 F.3d 528, 25 Wage & Hour Cas.2d (BNA) 1716 (2015)
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Rule of Law:
The determination of whether an unpaid intern is an 'employee' under the Fair Labor Standards Act (FLSA) is based on the 'primary beneficiary' test, which uses a flexible, non-exhaustive set of factors to assess the economic reality of the intern-employer relationship and determine who is the principal beneficiary of the arrangement.
Facts:
- Eric Glatt worked as an unpaid intern for the film 'Black Swan' in the accounting and post-production departments.
- Glatt's duties included copying, filing, tracking purchase orders, transporting paperwork, and running errands.
- During his internship, Glatt was enrolled in a non-degree graduate program that did not offer him academic credit for the work.
- Alexander Footman, who had graduated with a film studies degree but was not enrolled in school, also worked as an unpaid intern on 'Black Swan' in the production department.
- Footman's responsibilities included setting up office furniture, taking lunch orders, making coffee, and running errands; when his schedule was reduced, he was replaced by another unpaid intern.
- Eden Antalik worked as an unpaid publicity intern at Fox Searchlight’s corporate office in New York.
- Antalik was enrolled in a university program that required an internship for graduation, but she did not receive academic credit for this specific internship.
- Antalik's duties included compiling media summaries, making travel arrangements, organizing catering, and setting up for press events.
Procedural Posture:
- Plaintiffs Eric Glatt, Alexander Footman, and Eden Antalik filed a class action complaint against Fox Searchlight and Fox Entertainment Group in the U.S. District Court, seeking unpaid wages under the FLSA and New York Labor Law.
- Glatt and Footman moved for partial summary judgment on the issue of their employment status, and the defendants cross-moved for summary judgment.
- Antalik moved for certification of a class of New York interns and for conditional certification of a nationwide FLSA collective action.
- The district court granted partial summary judgment to Glatt and Footman, finding they were employees.
- The district court also granted Antalik's motions for class and collective action certification.
- The defendants (appellants in this action) successfully moved the district court to certify its order for an immediate interlocutory appeal.
- The U.S. Court of Appeals for the Second Circuit granted the defendants' petition to hear the interlocutory appeal.
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Issue:
Does the determination of whether an unpaid intern qualifies as an 'employee' under the Fair Labor Standards Act (FLSA) depend on a flexible, totality-of-the-circumstances 'primary beneficiary' test rather than a rigid application of the Department of Labor's six-factor test?
Opinions:
Majority - Judge Walker
Yes. The proper test to determine whether an unpaid intern is an employee under the FLSA is to ask whether the intern or the employer is the primary beneficiary of the relationship. The court rejected the Department of Labor's rigid six-factor test, finding it outdated and unpersuasive. Instead, it adopted a flexible, non-exhaustive, seven-factor test that examines the totality of the circumstances to assess the 'economic reality' of the relationship. This approach focuses on the educational nature of the internship and is better suited to modern internships tied to formal education. Because the district court applied the wrong legal standard, its grant of summary judgment and its class certification orders must be vacated and the case remanded for reconsideration under the new primary beneficiary test.
Analysis:
This decision marks a significant shift in labor law for unpaid internships within the Second Circuit, replacing the Department of Labor's rigid, all-or-nothing six-factor test with a more flexible, holistic 'primary beneficiary' standard. This new standard provides employers with greater latitude to structure unpaid internships legally, provided the educational benefit to the intern outweighs the immediate advantage to the employer. However, the context-specific, multi-factor balancing approach also introduces more uncertainty, making it harder for both interns and employers to predict outcomes and likely more difficult for plaintiffs to achieve class certification due to the individualized nature of the inquiry.
