In October, former Oscar de la Renta intern Monica Ramirez filed suit against the design house, alleging that she was misclassified as an intern and not paid for doing what would otherwise be considered entry-level work. Since the initial filing, we haven't heard too much about the lawsuit. However, as of this past week, the New York-based design house, whose founder passed away just days after the lawsuit was filed, asked the Supreme Court of New York state to put the former unpaid intern's class action lawsuit on hold for the time being.
Specifically, de la Renta's counsel stated that the current case should not proceed until the Second Circuit Court of Appeals issues rulings in the two cases filed by former Hearst Corporation and Fox Entertainment Group Inc. interns. The legal team for the design house is seeking a complete stay in the lawsuit until 10 days after the appeals court decides Glatt v. Foxand Wang v. Hearst, both of which were argued in late January. They key question in both of those cases: When is an intern really an employee?
During oral arguments in the Fox case, the Second Circuit panel, which consisted of Judges Richard Wesley, John Walker, and Dennis Jacobs, was openly critical of the U.S. Department of Labor’s six-factor test for determining whether the Fair Labor Standards Act’s minimum wage and overtime requirements apply to interns. The six-factors include the following: 1) The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment; 2) The internship is for the benefit of the intern; 3) The intern works under close staff supervision and does not displace regular employees; 4) The employer derives no immediate advantage from and may in fact be impeded by the intern; 5) The intern is not necessarily entitled to a job after the internship; and6) The employer and the intern understand that the intern is not entitled to wages.
Instead, the panel seemed more favorable toward a “totality of the circumstances” analysis, which would allow courts to balance the primary benefits derived by the employer and the intern without necessarily being limited to the Department of Labor’s test. While the panel largely agreed that the six-factor test is overly rigid, it appeared to reject that “learning to work," a significantly lower standard, is a sufficient benefit derived by interns to consider them exempt under the Fair Labor Standards Act. It is worth noting, although it is not surprising, that the interns in the Fox and Hearst cases are pushing for an analysis under the Department of Labor's six-factor test. This is a tough standard for nearly any internship program to meet, making it favorable to the former interns.
Finally, the panel expressed some concern that the plaintiffs in both cases are advocating for a position that could lead to the end of all internships. Indeed, the Second Circuit’s decision in these cases will certainly have broad implications for the future of unpaid internship programs, and as we can see from the de la Renta case (and the others that are currently pending), the rulings in the aforementioned two cases will have sweeping effects.