The Orlando Sentinel recently ran an article with the headline, “Unpaid internships are back, with the Labor Department's blessing.” Another article (from the Washington Examiner) explained that the new Department of Labor rules adopted stricter rules that will create a higher bar for employers. Confused yet?
Because these headlines might be unclear or even misleading to Florida employers, I decided to write this article from the perspective of a labor and employment lawyer in Florida who only represents employers.
A few months ago I wrote an article warning Florida businesses owners that they should not assume that they can use summer interns as free labor.
What changed? Well, the Department of Labor (DOL) had a couple cases appealed and the courts of appeals concluded that the DOL internship tests were too restrictive. Both of the appellate courts adopted standards that concentrated on whether the internship was primarily educational. In fact, in December 2017, the U.S. Court of Appeals for the Ninth Circuit became the fourth federal appellate court to expressly reject the U.S. Department of Labor’s six-part test for determining whether interns and students are employees under the Fair Labor Standards Act (FLSA).
In January 2018 the Department of Labor announced that it was endorsing a new internship test for assessing whether an intern can be unpaid or whether the individual really is an employee and must receive minimum wage and overtime if the person works over 40 hours in a workweek.
Specifically, the Department of Labor clarified that going forward, the DOL will conform to these appellate court rulings by using the same “primary beneficiary” test that these courts use to determine whether interns are employees under the FLSA. The Wage and Hour Division will update its enforcement policies to align with recent case law, eliminate unnecessary confusion among the regulated community, and provide the DOL’s investigators with increased flexibility to holistically analyze internships on a case-by-case basis.
Rather than explaining what the old DOL test was, this article will only lay out the new DOL test, in an effort to help Florida employers understand what the new rule will be.
The DOL revised its Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act.
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.
Courts have described the “primary beneficiary test” as a flexible test, and no single factor is determinative. Accordingly, whether an intern or student is an employee under the FLSA necessarily depends on the unique circumstances of each case.
Although it is natural to assume that because President Trump is pro-business, this means that Florida businesses can now use interns freely without paying them. However, that would be a dangerous conclusion to reach. The DOL fact sheet clearly warns employers that if the DOL analysis of the above 7 factor circumstances reveals that an intern or student is actually an employee, then he or she is entitled to both minimum wage and overtime pay under the FLSA. On the other hand, if the analysis confirms that the intern or student is not an employee, then he or she is not entitled to either minimum wage or overtime pay under the FLSA.
In this changing area, Florida business owners are advised to consult an experienced labor and employment attorney if they are planning to use unpaid interns.
If you need any assistance in this area, please email or call the Law Office of David Miklas, P.A. at 1-772-465-5111.
You can read more of our employment law articles on our legal updates page.
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4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
The revised fact sheet explains:
The Test for Unpaid Interns and Students
Courts have used the “primary beneficiary test” to determine whether an intern or student is, in fact, an employee under the FLSA. In short, this test allows courts to examine the “economic reality” of the intern-employer relationship to determine which party is the “primary beneficiary” of the relationship. Courts have identified the following seven factors as part of the 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.
Do the new internship rules mean summer interns do not need to be paid in Florida?