By: Kyle D. Kring
The U.S. Labor Department’s new guidelines for unpaid interns seek to make it easier for employers to use unpaid interns. The guidelines consist of a new “primary beneficiary test” using seven factors to determine whether the intern meets the standard for being unpaid. This standard is much more lenient for employers after the previous six factor test faced a great deal of criticism.
California employers should be aware of the new guidelines. California has yet to develop policy or case law of its own, making the FLSA guidelines applicable in California.
The new primary beneficiary test takes into account seven factors courts have identified to determine which party is the primary beneficiary of the employment relationship. 1 These factors are:
(1) The extent to which the intern and the employer clearly understand that there is no expectation of compensation;
(2) 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;
(3) The extent to which the internship is tied to the intern’s formal education program integrated coursework or the receipt of academic credit;
(4) The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar;
(5) The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning;
(6) 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; and
(7) 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.
Though these factors appear straight-forward, the test can be complicated in practice. If your business employs unpaid interns, contact an experienced employment attorney at Kring & Chung, LLP to ensure that you comply with these new guidelines.
Benjamin v. B & H Educ., Inc., No. 13-CV-04993-VC, 2015 WL 6164891, at *1 (N.D. Cal. Oct. 16, 2015), aff’d, 877 F.3d 1139 (9th Cir. 2017); Wang v. Hearst Corp., 877 F.3d 69 (2d Cir. 2017).