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Do I Have to Pay Interns?

Employers often wonder whether they have to pay their interns.  This is a question courts have also grappled with over the past few years.  Today’s Long Island employment law blog explores the question of whether interns are employees, requiring that employers pay them at least minimum wage.

Employees Must be Paid At Least Minimum Wage

Both federal law and state minimum wage laws generally require that employees earn at least the minimum wage. In New York, the minimum wage varies depending on several factors such as, among other things, location (county), the type of work performed, and the size of the business.

Workers who do not qualify as “employees” are not covered by minimum wage laws. Qualifying as an employee requires the application of several factors which courts have recently battled with. Specifically, for interns, the main issue revolves around whether employers are providing interns with real-world practical experience or if they are actually exploiting the interns for free labor.

Intern Court Cases Develop

On December 8, 2017, the Second Circuit Court of Appeals, New York’s highest federal court, decided whether student-interns of a magazine corporation should have been paid for the work they completed.

In Wang v. The Hearst Corporation, the student-interns agreed that they did work related to the subject matter they were studying in school and gained valuable skills.  But, they described their work as “repetitive.” For example, they claimed that even after mastering most of their tasks after a few weeks, they had to continue doing the same work for the rest of their internship.

In 2016, the United States District Court applied the “primary beneficiary test” to the Wang plaintiffs.  The “primary beneficiary test” is derived from a 2015 Second Circuit case, Glatt v. Fox Searchlight Pictures, Inc., which applied seven factors to determine whether an intern is an employee.  Under the primary beneficiary test, the question is who primarily benefits from the internship. In other words, if the employer ends up benefiting more than the intern, then the intern is classified as an employee and will be entitled to receive payment for minimum wage and overtime. If, however, the intern benefits more, then he or she will not be classified as an employee and will not receive minimum wage or overtime payments.  Courts are instructed to apply the seven factors by weighing and balancing the totality of the circumstances.

Applying the primary beneficiary test in the Wang case, the District Court ruled in favor of Hearst, the magazine corporation, finding that the plaintiffs were in fact correctly labeled as interns rather than employees.  The District Judge determined that all but one factor, either factored Hearst, or were neutral.  After the District Court’s decision, the interns appealed the court’s decision to the Second Circuit Court of Appeals, New York’s highest federal appellate court.

The Second Circuit carefully analyzed each of the seven factors.  The Appellate Court determined that only one of the factors favored the interns. Therefore, because the test required a case-by-case analysis based on the specific facts, the plaintiffs in Wang were correctly considered by Hearst to be interns.

So, Should I Pay My Interns?

The lesson from Wang and Fox Searchlight is that employers must pay close to attention to whether their interns are working primarily for the employer’s economic or business benefit or primarily for the interns’ learning benefit.  Because courts review these cases by looking at the totality of the circumstances and on a case-by-case basis, it’s difficult to provide broad advice to employers about their interns.  Employers who are unsure as to whether their interns should be paid, should speak to experienced employment lawyers, such as Famighetti & Weinick.  Our Long Island employment lawyers are available at 631-352-0050 or on the internet at http://linycemploymentlaw.com.

If you are interested in other intern related employment law questions, read Long Island employment Matthew Weinick’s published article about intern sexual harassment protections, distributed by the Nassau County Bar Association’s newspaper.

Today’s Long Island employment law blog was written Hofstra Law School intern, Thalia Olaya.

Should interns be paid?
Should interns be paid?

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