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  • Appeals Court Vacates Ruling in Unpaid Internship Case

    July 08, 2015 | By NACE Staff

    Legal Issues
    The Supreme Court in Washington DC.

    TAGS: internships, compensation, legal issues

    On July 2, the U.S. Court of Appeals for the Second Circuit vacated a lower court decision that Fox Searchlight Pictures had improperly classified former workers as unpaid interns rather than employees.

    In their decision, the U.S. Court of Appeals judges argued that the Federal District Court used an incorrect standard—the criteria established by the U.S. Department of Labor (DOL)—to determine the classification of a worker, calling the DOL’s standards out of date and “too rigid for our precedent to withstand.”

    Instead, the judges ruled that the basis for the test should be the internship’s educational benefits. The ruling sends the case back to the lower court, where the U.S. Court of Appeals ordered the Federal District Court to apply a “primary beneficiary test.” Using this standard, the worker can be considered an employee only if the employer benefits more from the relationship than the intern.

    The concept of a primary beneficiary assessment is consistent with the NACE position statement on internships. In 2011, NACE issued a position statement on internships that provides a definition and criteria to assess internship opportunities.

    At the foundation of such an assessment is the tenet that the internship is a legitimate learning experience benefitting the student and not simply an operational work experience that just happens to be conducted by a student. The core question, according to NACE, is whether or not work performed by an intern will primarily benefit the employer in a way that does not also advance the education of the student.

    To effectively implement this definition, NACE developed criteria that college career centers and employer recruiters can use to identify workplace experiences that can legitimately be identified as “internships.” These criteria are:

    1. The experience must be an extension of the classroom: a learning experience that provides for applying the knowledge gained in the classroom. It must not be simply to advance the operations of the employer or be the work that a regular employee would routinely perform.

    2. The skills or knowledge learned must be transferable to other employment settings.

    3. The experience has a defined beginning and end, and a job description with desired qualifications.

    4. There are clearly defined learning objectives/goals related to the professional goals of the student’s academic coursework.

    5. There is supervision by a professional with expertise and educational and/or professional background in the field of the experience.

    6. There is routine feedback by the experienced supervisor.

    7. There are resources, equipment, and facilities provided by the host employer that support learning objectives/goals.

    NACE’s full position statement on U.S. internships can be found at