Employer Law Report

Less than a month after the New York Times ran an article on the DOL’s position regarding unpaid internships, the U.S. Department of Labor’s Wage and Hour Division has released a Fact Sheet explaining the test used to determine whether an intern is an employee under the FLSA. Although the test – which is laid out in one of our previous posts – remains unchanged, the Fact Sheet provides information regarding the test’s factors that may be useful to employers trying to discern whether their interns are covered by the FLSA’s overtime and minimum wage provisions.

The first factor is whether 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. The Fact Sheet provides additional detail on how to analyze this factor, noting that this “educational environment” often exists where a college or university exercises oversight over the internship program and provides educational credit. Also, the more the internship provides the individual with skills that can be used in multiple employment settings, as opposed to skills particular to one employer’s operation, the more likely the intern would be viewed as receiving training.

The Fact Sheet also elaborates on the third requirement, i.e. that the intern does not displace regular employees, but works under close supervision of existing staff. Here, the DOL advises that if an employer uses interns as substitutes for regular workers or to increase its existing workforce during specific time periods, the interns are covered by the FLSA. In addition, if the employer would have hired additional employees or required existing staff to work additional hours had the interns not performed the work, then the interns will be viewed as employees. “Conversely, if the employer is providing job shadowing opportunities that allow an intern to learn certain functions under the close and constant supervision of regular employees, but the intern performs no or minimal work, the activity is more likely to be viewed as a bona fide education experience.”

Employers should keep in mind that the DOL interprets the FLSA’s definition of the word “employ” very broadly and is inclined to treat an individual as an employee rather than an intern unless all factors of the test are met.