Interns have long existed in a legal grey area. As long as the “intern” is validly an intern, he or she is not entitled to the protections of the Fair Labor Standards Act, i.e. not entitled to be paid minimum wage or overtime. However, if the intern is actually an employee, then the intern must be paid at least minimum wage and overtime at time and a half the intern’s regular rate of pay.
Traditionally, the Department of Labor relied on a six-point test that focused more on the nature of the relationship between the intern and the company and included factors such as, whether there was an agreement that the internship was unpaid, whether there was no guarantee of a full-time job, and whether other regular employees were displaced. The six-point test allowed employers plenty of latitude to hire interns yet treat them as employees. The result was that many interns were actually more like free labor for the employers than students learning.
Federal appellate courts began changing that balance. Over the last 2 years, the 2nd Circuit Court of Appeals and the 9th Circuit Court of Appeals issued opinions adopting a more intern friendly test. The new test focused more on whether the internship was truly educational. Some of the relevant factors address whether the intern receives academic credit for the internship and whether the focus is on training.
The Department of Labor just announced that it will update its policies to reflect the test adopted by the Courts. To begin that process, the Department of Labor updated its Fact Sheet on internships to give the seven factors that are now deemed relevant in determining whether an intern is entitled to the protections of the Fair Labor Standards Act.
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