Until recently, the U.S. Department of Labor (DOL) took the position that unpaid interns are likely to be employees subject to minimum wage and overtime protection under federal law unless the employer could show the internship was structured in a way that met a strict test.
Perhaps recognizing that its rigid test conflicted with the more pragmatic test being applied by the federal courts – most recently in rulings last December by the Ninth and Second Circuit Courts of Appeals – DOL announced on January 5, 2018 that it was abandoning its test in favor of the “primary beneficiary” test being applied by the courts.
Although the legal analysis for determining whether an intern is an employee under the “primary beneficiary” test is highly fact-specific, the two recent decisions cited above provide good examples of how to design an internship program in a way that significantly limits the potential for violating the wage and hour requirements of the Fair Labor Standards Act (FLSA).
Members of the Center for Workplace Compliance (CWC) can read more here.