Eleventh Circuit Joins Second Circuit in Rejecting DOL Position on Unpaid Interns

On September 11, 2015 the U.S. Court of Appeals for the Eleventh Circuit announced that it joined the Second Circuit in rejecting the U.S. Department of Labor’s (“DOL”) rigid six part test for determining whether unpaid interns were employees and should have been paid minimum wages and overtime for their services. Schumann and Abraham et al v Collier Anesthesia, P.A., Wolford College, LLC, Thomas Cook and Lynda Waterhouse, No. 14-13169, 2015 BL 294459 (11^th Cir. Sept. 11, 2015), citing to Glatt v. Fox Searchlight Pictures, Inc., Nos. 13-4478-cv, 13-4481-cv (2d Cir. July 2, 2015)

As did the Second Circuit, the Eleventh Circuit found the factors considered by the DOL in its “guidance” on interns and trainees and the DOL’s  interpretation of the U.S. Supreme Court’s 1947 holding in Walling v. Portland Terminal Co., 330 U.S. 148 (1947) to be “useful” but refused to defer to that guidance.  Noting that the DOL has no special expertise in interpreting court decisions, the Eleventh Circuit instead followed the Second Circuit in holding that seven non-exclusive factors should be considered to determine whether the intern or the putative employer was the primary beneficiary of the services being rendered:

1. 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.
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including clinical and other hands‐on training provided by educational institutions.
3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
6. 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.
7. 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.

The Eleventh Circuit expressly stated that in applying these factors to determine whether the intern or the putative employer was the primary beneficiary of the interns’ services, no one factor is determinative and every factor need not point in the same direction.  Further, courts may consider other relevant evidence beyond the specified factors in appropriate cases.

Because the District Court had applied the old DOL six factor test in determining that the interns here were not employees, the Court of Appeals vacated and remanded the case back to the District Court to apply the correct test.  In doing so, the Appeals Court went to great lengths to discuss each of the seven factors as applied to the facts at hand and to describe the road map that the District Court should follow, while carefully stating: “we do not take a position at this time regarding whether the students in this case were “employees” for purposes of the FLSA.”