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Employer wins dispute over intern pay

Employer wins dispute over intern pay

A federal appeals court upheld a lower court ruling and rejected claims by five participants in Hearst Corp.’s internship programs that they should be considered employees rather than unpaid interns under the Fair Labor Standards Act.

“The question is whether Hearts furnishes bona fide for-credit internships or whether it exploits student-interns to avoid hiring and compensating entry-level employees,” said the 2nd U.S. Circuit Court of Appeals in New York in Friday in Xuedan Wang et al. v. The Hearst Corporation.

In considering the interns’ appeal of a ruling against them by a U.S. district court in New York, the three-judge appeals panel referred to the 2nd Circuit’s 2016 ruling in Glatt v. Fox Searchlight pictures Inc., in which it listed seven factors to be considered in determining this issue.

These included, the extent to which the intern and the employer understood there is no expectation of compensation and the extent to which the internship provides training similar to that which would be given in an educational environment.

After analyzing these factors, the ruling said, “The facts of this case permit inference” that support both New York-based Hearst and the interns.  “The interns and amici urge that such mixed inferences foreclose a ruling on summary judgment.

“We disagree, for the reasons explained by the district court, which weighted all factors under the totality of the circumstances, and concluded that the interns are not ‘employees’ for the purposes of the FLSA,” said the ruling, in affirming the lower court’s ruling.

Last year, two 21st Century Fox Inc. units settled class-action litigation by former interns who said they should have been paid for their work, in a case that sparked multimillion-dollar settlements with interns at other big media companies.