DOL Changes Course on When an Intern Should Be Paid
In the last few years, we have discouraged our clients — including many of the non-profit organizations that we represent on a pro bono basis — from engaging unpaid interns. Under the Department of Labor’s old six-factor test, whether a position required compensation has been based on a totality of the circumstances analysis focusing on the benefit gained by the employer from the intern’s work. Practically, this resulted in most internship positions requiring compensation.
On January 5, 2018, the DOL announced it was adopting the “primary-beneficiary” test that has been adopted by a number of circuit courts. Under the seven-factor “primary-beneficiary” test, the ultimate question is whether the primary beneficiary of the opportunity is the employer or the intern. The factors identified include whether the opportunity is understood to be uncompensated, provides training, entitles an intern to academic credit, corresponds to the academic calendar, is limited in duration, complements and does not displace paid employees, and does not guarantee full-time employment.
While employers should see this change as an effort by the current administration to encourage the growth of unpaid internships, employers should still be careful when engaging unpaid interns. The college student who spends most of his time getting coffee and doing clerical tasks should be paid for his work. Internship programs should provide meaningful training opportunities if the internships are going to be unpaid. If an employer decides to offer unpaid internships, we recommend partnering with a school who will provide student interns class credit and coordinating with the school so the internship corresponds with their class schedule.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.