Almost exactly five years after Xuedan "Diana" Wang and five other named plaintiffs filed a headline-making lawsuit against Hearst Corp., claiming that it violated federal and state law by failing to pay thousands of interns, the publishing giant has been handed what may be the case's final victory. Late last week, the U.S. Circuit Court of Appeals for the Second Circuit upheld a lower court's ruling and rejected Wang's claims that Hearst “systemically" exploited eager young students by getting them do entry-level work for free by labeling them as “interns."
According to Wang's complaint, which was filed in December 2011 in federal court in New York and spawned at least a dozen other similar lawsuits, she and up to 3,000 other former interns for Hearst's various publications, which include, Elle, Marie Claire, Cosmo, and Seventeen, were actually entry-level employees, but were classified as interns, and thus, were denied both minimum wage and overtime payment in violation of the Fair Labor Standards Act, as well as New York state law.
Both New York state and federal law set forth rather stringent requirements that must be met in order for a position to be labeled an internship (as opposed to entry level employment), and therefore, exempt from minimum wage requirements, and Wang argued that Hearst's internships did not meet these standards, thereby entitling its "interns" to minimum wage.
Following a loss before a lower federal court in New York, Wang and co. filed an appeal to the Second Circuit, whose three-judge panel sided with Hearst last week. In a decision written by Judge Dennis Jacobs and released on Friday, the Second Circuit stated, “The question is whether Hearst furnishes bona fide for-credit internships or whether it exploits student-interns to avoid hiring and compensating entry-level employees."
The panel – in considering whether Wang and co. were interns or entry-level employees – looked to the test that was established in Glatt v. Fox Searchlight Pictures Inc., another unpaid internship case, which centers on whether the intern or the employer was the "primary beneficiary" of the so-called internship relationship. Ultimately, the panel held that they "disagree [that Hearst exploits student-interns to avoid hiring and compensating entry-level employees] ... and conclude that the interns are not ‘employees’ for the purposes of the [Fair Labor Standards Act]."
In holding that the plaintiffs were, in fact, interns and not entry-level employees, the Second Circuit's panel specifically noted that it was made clear in advance that Hearst's internships did not entail monetary compensation, that the internships provided training similar to what would be given in an educational environment, that such internships were tied to a formal education program, and that each of the plaintiffs "had an academic or aspiring professional connection to fashion," which was at the core of their internships.
Interestingly, Judge Jacobs spoke to one of the core complaints included in most of the internship lawsuits to date: That internships should not include the so-called interns performing "menial and repetitive tasks," such as "many [of the] tasks in Hearst’s fashion closets," with little "close supervision or guidance ... in contrast to their [clinical and other hands‐on training] academic experiences," something that was spotlighted in Wang's suit.
Speaking to this point, Jacobs stated, "The appellants’ tacit assumption is that professions, trades, and arts are or should be just like school; but many useful internships are designed to correct that impression." Judge Jacobs cited another case in this circuit in stating that interns accrued valuable skills by "repeating administrative and organizational tasks such as 'how to be more organized and focused' in a professional environment."
As of now, it is unclear whether Wang and the other named plaintiffs will appeal the latest finding, but if they do, such an appeal would go before the Supreme Court, should the United States' highest court accept the appeal, an unlikely outcome for any case given the small number of cases that the Supreme Court takes in during any given term.
Until then, it seems the unpaid fashion industry internship will live to see another day.
* The case is Wang v. The Hearst Corporation, 16‐3302‐cv (2nd Cir.).