The Department of Labor announced [HERE] on January 5 that it has given up on its six-part test for determining whether interns and students are "employees" under the Fair Labor Standards Act (FLSA), and thus entitled to minimum wage and overtime wages.
DOL announced that it will follow the “primary beneficiary” test. Four federal Circuit Courts have rejected the DOL's test, and instead use a primary beneficiary test. These are the 2nd, 6th, 9th, and 11th.
The 9th Circuit was the latest to weigh in on whether to follow the DOL's test, and that court used the primary beneficiary test instead. See FLSA: Cosmetology students are not employees.
The main criticism of the DOL's test has been that it is too rigid, without allowing consideration of all the facts and circumstances.
Take a look at both, and see what you think.
The “primary beneficiary” test:
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.
The DOL's now-replaced test:
1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.