In the latest chapter in the ongoing intern battles currently being waged in the United States District Court for the Southern District of New York, Judge Harold Baer rejected plaintiffs’ novel assertion of unlawful wage deductions. Wang v. Hearst Corp., 2013 U.S. Dist. LEXIS 3768 (S.D.N.Y. Jan. 9, 2013). The Wang litigation concerns the applicability of the FLSA and New York Labor Law to interns at various properties owned by media conglomerate Hearst Corporation.
In order to comply with the DOL-authored test for an intern to be properly classified as a “trainee” under the FLSA, the intern must receive instruction “similar to training which would be given in an educational environment.” In keeping with this requirement, many programs – including Hearst’s – require that the intern be enrolled and receive college credit, thereby presumably incurring costs associated with enrollment. In fact, under New York Department of Labor regulations, if an intern is receiving school credit, they are not “deemed to be working,” and no wages are due. 12 NYCRR § 142-2.11. Latching onto this concept, plaintiffs in Wang alleged that this enrollment requirement, in light of plaintiffs’ allegation that they were misclassified and should have been entitled to “employee” protections (notwithstanding this regulation), constituted an indirect deduction from wages, as the interns suffered the out-of-pocket cost associated with being enrolled and receiving course credit. Judge Baer ruled this claim defective as a matter of law, logically observing that Plaintiffs were “unable to provide a single authority for the position that Section 193(3)(a) [of New York’s deductions statute] should apply in cases where no wages, or anything arguably equivalent, are alleged . . . In other words, there can be no ‘deduction’ within the meaning of the statute when there is nothing from which to take away or subtract.”
Wang provides an excellent example of the creative arguments plaintiffs’ counsel continue to make as case law evolves under the Fair Labor Standards Act and New York law. Employers must analyze their own businesses and anticipate the most likely or creative arguments that employees (or their attorneys) may assert, consider potential defenses (including state and industry specific defenses) and take steps to minimize potential liability.