In September 2013, two interns who had worked without pay on Fox Seachlight‘s Black Swan movie convinced a United States District Judge that they were actually employees and should have been paid. That judge based his ruling on a six-factor test that the U.S. Department of Labor derived from the Supreme Court’s decision in Walling v. Portland Terminal Co., 330 U.S. 148 (1947):
- The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;The intern is not necessarily entitled to a job at the conclusion of the internship;
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
On July 2, 2015, the Second Circuit Court of Appeals reversed the ruling in Glatt v. Fox Searchlight Pictures, Inc., Case No. 13‐4478‐cv (2nd Cir. July 2, 2015). It rejected the Department of Labor text, and stated that decisions about whether interns are employees under the Fair Labor Standards Act rest on whether the intern or the employer is the primary beneficiary of the relationship. For guidance in cases to come, the court offered the following seven non‐exhaustive set of considerations:
- The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
- The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands‐on training provided by educational institutions.
- The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
- The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
- The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
- The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
- The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.