Published on:

Interns Entitled to Overtime Pay Only if Certain Factors Met

Internships were designed as a way for students to get some hands-on training, experience, and make some connections, but employers often take advantage of this system to put students to work for free so they can avoid paying employees. Many lawsuits have been filed against employers by interns alleging they should have been compensated for the work they did.

Although the line between intern and employee can sometimes be a bit vague, the Second Circuit Court recently began recognizing the “primary beneficiary” test to determine if a worker should be classified as an intern or an employee. The test is composed of seven parts, although more factors can certainly be considered. The aspects used by the Second Circuit include:

  • Whether both parties agree ahead of time that there is no compensation expected;
  • Whether the intern will receive training on par with the kind they would receive in an educational setting;
  • Whether the intern can receive educational credit for the internship and/or the internship is connected with some sort of formal education program;
  • Whether the internship corresponds with the academic calendar in order to accommodate the intern’s educational commitments;
  • Whether the duration of the internship is limited to the period that provides the student with education and experience that benefits them in their education;
  • Whether the intern’s work takes the place of work normally done by employees; and
  • Whether both parties understand there is to be no expectation that the intern will receive a paid job offer once they’ve completed their internship.

It’s common for employers to offer interns a paid position upon completion of an internship in order to entice them into their internship program, but it’s not always legal. Essentially, the employer is avoiding paying the employee for their training time, for which they are legally obligated to compensate their workers.

The Second Circuit Court recently used this test to determine whether a class of interns was owed compensation for the work they did for Hearst Corporation. The employment lawsuit was filed in New York, in 2012, by Xuedan Wang, along with four others, all of whom worked as interns without compensation at various magazines owned by Hearst.

The lower court ruled in favor of Hearst, but the plaintiffs appealed that decision to the Second Circuit Court, which heard arguments for the case alongside a similar lawsuit filed by a group of interns against Fox Searchlight Pictures. That was when the Second Circuit Court decided to start using its new “primary beneficiary” test, and sent the Hearst case back to the trial court for reconsideration using the new standard.

The trial court again ruled in Hearst’s favor and the plaintiffs again appealed that decision to the Second Circuit Court. Although the circuit court admitted it was a tough call to make, with some factors favoring Hearst and others favoring the plaintiff, ultimately the three-judge panel believed the factors favoring Hearst outweighed the factors favoring the plaintiffs.

When considering the “primary beneficiary” test, the court found that only one of the seven parts favored the plaintiffs’ position – the other six were either neutral or favored Hearst.

The Chicago class action lawyers at the Chicago Overtime Law Center are investigating unpaid overtime claims by waiters and bus boys and other restaurant and hotel workers against national restaurant chains including Hilton, DoubleTree, W, Marriott, Sheraton, Holiday Inn, Extended Stay America, Staybridge Suites, Best Western, HomeTown Buffet, Old Country Buffet, Applebees, Chipotle, Red Lobster, Olive Garden, Cracker Barrel, Outback Steak House, Taco Bell, Burger King, Chili’s, Kentucky Fried Chicken, Starbucks, Dunkin’ Donuts, Wendy’s and hotels for mis-classifying employees as managers or assistant managers, forcing employees to work off the clock at business, failing to share all tips, erasing or altering time sheets or time records, pressuring workers not to report or record overtime, and otherwise failing to pay workers for overtime and other wages. If you are the victim these wage theft practices call us at (312) 869-4095 or contact us online.

The Chicago class action attorneys at the Chicago Overtime Law Center have three decades of experience fighting to help employees who are victims of wage, overtime and tip theft by their employers. We have a team of Chicago unpaid overtime lawyers who concentrate on prosecuting state and nationwide class action lawsuits. Our attorneys work out of Chicago and Oak Brook offices and pursue claims for workers all over the Chicago area including Palatine and Barrington. We protect unpaid workers who haven’t received overtime throughout the Chicago area including in DuPage, Lake, McHenry, Kane and Cook Counties.

Our Waukegan and Gurnee overtime lawyers are intimately familiar with the issues that arise during wage claim litigation, and we know the laws that govern overtime cases well. Many employers mis-classify employees as being exempt from overtime laws and pay workers salaries instead of hourly wages in order to avoid paying them overtime. Some employers mistakenly classify employees as exempt and others intentionally do so in order to circumvent the law. In either case, workers do not receive the wages they should, and a lawsuit may be the only way to recover their earned wages.

The Chicago Overtime Law Center is based in Chicago, and represents clients throughout the country who have unpaid overtime and other employment right claims.