January 22, 2018 It’s 2018: Do You Know Who Your Interns Are?
KEEPING YOU INFORMED…
Despite the currently (often below) freezing weather, Spring and Summer will be here before we know it. This means that employers across New York State will soon be accepting new classes of students and other individuals into their internship programs. One of the most frequently asked questions regarding internship programs is: “Do we need to pay our interns, or is it sufficient that they receive academic credit?”
Over the past several years, there has been a significant amount of controversy and concern regarding how to distinguish interns (especially unpaid interns) from employees, and whether interns need to be paid based on the work they will be performing in their internship. The U.S. Department of Labor (“DOL”) recently announced that it will adopt the Second Circuit Court of Appeals’ “primary beneficiary test,” which was established in the Court’s Glatt v. Fox Searchlight Pictures, Inc. decision. Practically speaking, this announcement means that the DOL is eliminating the use of its six-factor intern test and will, instead, analyze each situation regarding whether an individual is an intern or an employee on a case-by-case basis. The DOL has also updated its “Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act” to reflect this change.
While we have previously addressed other rules affecting interns, including the DOL’s test for distinguishing interns from employees, an employer may now rely on the test articulated in Glatt to determine whether its “interns” need to be paid as “employees” or may be considered unpaid “trainees.” This test analyzes which party (the employer or the individual) is the “primary beneficiary” of the alleged internship by considering the economic realities of the parties’ relationship including, but not limited to, the following seven factors:
1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
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 by 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.
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.
Because this balancing test is applied on a case-by-case basis, no one factor is determinative. In light of the DOL’s announcement, employers should be using these seven factors to determine whether their “interns” are actually employees and modifying their internship policies, practices and procedures accordingly.
If you have any questions regarding how best to analyze or revise your internship program or need assistance applying the “primary beneficiary test” to a particular individual(s), please contact Alyssa Zuckerman or one of our other attorneys by calling (631) 694-2300.
THIS MEMORANDUM IS MEANT TO ASSIST IN GENERAL UNDERSTANDING OF THE CURRENT LAW. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. THOSE WITH PARTICULAR QUESTIONS SHOULD SEEK THE ADVICE OF COUNSEL.
© Lamb & Barnosky, LLP 2018