The U.S. Department of Labor (“DOL”) abandoned its former test for assessing whether interns qualify as “employees” under the Fair Labor Standards Act (“FLSA”). Aligning itself with several appellate courts, including the Ninth and Second Circuits, the DOL now embraces a seven-factor “primary beneficiary” test to distinguish employees from bona fide interns. The test enables courts to examine the economic reality of the intern-employer relationship, ultimately determining which party is the “primary beneficiary” of the relationship. A finding that the intern is actually an employee implicates the employer’s obligation to compensate the intern for both minimum wage and overtime pay. If the test confirms the intern is not an employee, then the intern is not entitled to either minimum wage or overtime pay under the FLSA.
A copy of the DOL’s statement announcing its adopted standard can be found here.