2nd Circuit Adopts New ‘Primary Beneficiary’ Test for Determining If Unpaid Interns Are Employees

A recent wave of multimillion-dollar lawsuits brought against employers by unpaid interns demanding compensation for their work has resulted in settlements but no definitive word from the federal courts on when interns should be considered employees. Despite the volume of litigation in this area, the factors that federal district courts have considered to determine whether an intern must be paid have varied, leaving the issue unsettled — until July, when the 2nd U.S. Court of Appeals ruled on the issue. On July 2, the 2nd Circuit in Glatt v. Fox Searchlight Pictures, 791 F.3d 376, held that a new test — the “primary beneficiary” test — should be used to determine whether an intern must be considered an employee and thus paid. In this article, SRZ partners Mark E. Brossman, Ronald E. Richman and Holly H. Weiss and special counsel Scott A. Gold discuss the factors of the 2nd Circuit’s “primary beneficiary” test, which emphasize the educational aspects of internships and provide greater clarity to employers as to when unpaid internship programs are permitted.