On March 3, 2014, NELA joined the National Employment Law Project (NELP), the Economic Policy Institute, the Writers Guild of America East, Ross Perlin and Professor David Yamada in submitting an amicus curiae brief in the U.S. Court of Appeals for the Second Circuit in support of plaintiff Xuedan Wang and similarly situated unpaid interns who were not compensated for their hours worked at The Hearst Corporation in violation of the Fair Labor Standards Act and New York state law. NELA members Adam Klein and Rachel Bien of Outten & Golden LLP represent the plaintiff and potential class. The issues raised by this case fit squarely within NELA's amicus priorities of protecting workers' wages and opposing wage theft.
The Hearst Corporation is one of the largest publishers of monthly magazines in the United States. Since 2008, Hearst has sought to reduce overhead and costs by eliminating paid positions and, at some magazines, directing that unpaid interns be hired. Hearst engaged over 3,000 interns from 2007 to 2013. Many of the interns worked more than 40 hours per week and Hearst did not dispute that some of the duties performed by the interns had been and were now being done by paid employees.
Wang alleged in the U.S. District Court for the Southern District of New York that Hearst violated the minimum wage, overtime, and recordkeeping requirements of the FLSA and NY state law by using unpaid interns. Wang moved for summary judgment regarding whether unpaid interns are considered to be employees in order to be covered by the FLSA. Wang asked the court to adopt the "immediate advantage" standard, which would require an employer who obtains a direct or immediate benefit from “suffered or permitted” work to compensate the worker. The court refused and instead held that, under the "totality of the circumstances" test, which looks at the economic reality of the relationship, interns did not have the status of employees.
Wang also moved for class certification of the New York state law claims under Fed.R.Civ.P. 23(a) and 23(b)(3). The court denied this motion, finding that the commonality requirement under Rule 23(a)(3) was not satisfied because Wang could only point to a corporate wide uniform policy of relying on unpaid interns that did not answer liability questions about what the interns did and what benefits they received. The court went on to find that the superiority and predominance requirements of Rule 23(b)(3), which is more exacting than the commonality requirement of Rule 23(a)(3), was not met because analysis of liability factors such as the interns’ duties, training and supervision would have to be individualized because no uniform policy regarding the contents of the internships at the various magazines existed.
The amicus brief urged the appellate court to construe the FLSA broadly so that employers cannot do an end run around the wage and hour laws by categorizing its employees as unpaid interns. Amici also focused the court’s attention on how the use of unpaid internships is increasing in for profit firms; harms workers and the national labor market; and increases the debt load of students who derive little value from the experience. NELA wishes to thank Tsedeye Gebreselassie, Catherine Ruckelshaus, Diego Rondon Ichikawa and Anthony Mischel at NELP for drafting the brief.