The Department of Labor announced Friday that it will use the “primary beneficiary” test favored by courts to determine whether interns are employees under the Fair Labor Standards Act, and thus entitled to its minimum wage and overtime protections. Under the primary beneficiary test, an intern is only considered an employee of a for-profit entity if the economic reality of the internship reveals that the entity, rather than the intern, is the primary beneficiary of the internship. This test considers the following factors:
Notably, no single factor is determinative, making the primary beneficiary test more flexible than the DOL’s previous six-factor test. Under the previous test, issued by the DOL in 2010, an intern was considered an employee for purposes of the FLSA unless all six factors weighed in the employer’s favor. The six factors included whether the intern displaced regular employees and whether the employer derived any immediate advantage from the intern’s work. The DOL’s move better aligns with recent federal court decisions and suggests an increased tolerance for unpaid interns at for-profit entities going forward.
If your organization will be directly affected by this announcement or if you have questions regarding the DOL’s primary beneficiary test, please contact your Warner Norcross + Judd labor and employment attorney.
