Appeals Court Ruling Could Boost Unpaid Internships

July 6, 2015

The U.S. Court of Appeals for the Second Circuit on Thursday issued a ruling that rejects a U.S. Labor Department list of six factors to consider in determining whether internships can be unpaid. The ruling threw out a lower court's ruling that two unpaid interns who worked on the film Black Swan were entitled to be classified as employees, and that they could pursue a class action.

The appeals court backed a single factor: "The proper question is whether the intern or the employer is the primary beneficiary of the relationship," and ordered the district court to reconsider the case with that standard. That single test may make it easier for many employers to justify unpaid internships. Many colleges have struggled with the unpaid internship issue, wanting to help students gain experience while wary of the ethical and legal issues involved when interns perform work that should result in their being classified as employees.

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