On January 5, 2018, the U.S. Department of Labor (DOL) issued revised guidance on the question of whether interns and students are “employees” under the Fair Labor Standards Act (FLSA) and, thus, must be paid at least minimum wage and overtime and receive other protections under the FLSA. Specifically, the DOL joined the U.S. Courts of Appeals for the Second, Sixth, Ninth and Eleventh Circuits in rejecting its prior rigid six-factor test for determining whether interns are “employees” in favor of the more flexible “primary beneficiary” test. The “primary beneficiary” test allows for consideration of the circumstances of each situation on a case-by-case basis and focuses on whether the intern or the company is the “primary beneficiary” of the relationship. The DOL’s adoption of this test brings its analysis of the status of unpaid interns in line with federal courts and may further incentivize employers to establish and/or continue unpaid internship programs.
On January 5, 2018, the DOL abandoned its rigid six-part test to determine whether workers are unpaid interns or “employees” who must be paid at least minimum wage and overtime and receive other protections under the FLSA. In its place, the DOL adopted the more flexible and holistic “primary beneficiary” test adopted by federal courts in the Second, Sixth, Ninth and Eleventh Circuit Courts of Appeals. The DOL’s stated goals in doing so include: (1) aligning its guidance with recent case law and eliminating unnecessary confusion among employers regarding the standards to be used in determining whether interns are “employees” under the FLSA and (2) providing investigators with increased flexibility to holistically analyze internships on a case-by-case basis.