U.S. DOL Adopts “Primary Beneficiary” Test in Determining Status of Unpaid Interns

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January 5, 2018

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On January 5, 2018, the U.S. Department of Labor (“DOL”) issued Field Assistance Bulletin No. 2018-2, adopting the “Primary Beneficiary” test used to determine whether or not unpaid interns should actually be classified as employees under the Fair Labor Standards Act (“FLSA”). Several federal circuit courts have used the primary beneficiary test to determine whether an unpaid intern is in fact an employee, and rejected the DOL’s prior six-factor test as being too rigid.

Thus, the DOL has now issued a revised version of Fact Sheet #71 that outlines the seven factors considered in the primary beneficiary test. This test offers employers greater flexibility, as no single factor is considered determinative of a worker’s status.  The seven factors are:

  1. The extent to which intern and employer understands that there is no expectation of compensation;
  2. The extent to which the internship provides training similar to that provided in an educational environment;
  3. The extent to which the internship is tied to a formal education program, such as receipt of academic credit or integration into coursework;
  4. The extent to which the internship accommodates interns’ academic commitments;
  5. The extent to which the internship’s duration is limited to a time period in which the internship provides beneficial learning;
  6. The extent to which the intern’s work complements (not replaces) the work of paid employees while still providing educational benefits to the intern;
  7. The extent to which the intern and employer understand there is no entitlement to a paid job at the completion of the internship.

Action Items

  1. Review the announcement and fact sheet.
  2. If engaging unpaid interns and students, consult with legal counsel to determine appropriate classification.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2018 ManagEase

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