The U.S. Department of Labor (DOL) has rejected the previous six-part test for determining whether interns and students are employees under the Fair Labor Standards Act (FLSA). Going forward, the DOL will use the “primary beneficiary” test to determine whether interns are employees under the FLSA.
The “primary beneficiary” test examines the “economic reality” of the intern employer relationship to determine which party is the “primary beneficiary” of the relationship.
The following seven factors are part of the test:
- The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee and vice versa.
- The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
- The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
- The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
- The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
- The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
- The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
The DOL’s Fact Sheet with further information can be found at: https://www.dol.gov/whd/regs/compliance/whdfs71.pdf