On January 5, 2018, the U.S. Department of Labor (DOL) implemented a new set of standards and FLSA  test for employers to use in determining whether the interns or students they bring in are eligible to receive compensation as employees.

In the past, students and interns may not have been considered “employees” under the FLSA guidelines, but the new “primary beneficiary test” has been implemented to determine a set of eligibility factors.

New tests to determine eligibility

Those factors include:

  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.

If analysis of these circumstances reveals that an intern or student is actually an employee, then they are entitled to both minimum wage and overtime pay under the FLSA. If the analysis confirms the intern or student is not an employee, they will not be entitled to minimum wage or overtime pay under the FLSA.

For more information, click HERE for the DOL Fact Sheet. https://www.dol.gov/whd/regs/compliance/whdfs71.htm#1