Set up a proper intern program
Joseph T. Bartulis, Jr.
While it's hard to imagine summer is right around the corner, certain employers annually look forward to the prospect of free summer labor provided by unpaid interns. But not every intern should be unpaid.
In 2010, the U.S. Department of Labor adopted a six-factor test to determine whether a person could lawfully be classified as an unpaid intern under the federal Fair Labor Standards Act. If all six factors were not met, the intern needed to be paid and treated just like any other paid employee, e.g. paid minimum wage and overtime eligible. A number cases were brought by interns challenging their unpaid intern status. In the 2015 case of Glatt v. Fox Searchlight Pictures Inc, the Second Circuit Court of Appeals deviated from the rigid six-factor test and adopted a more flexible seven-factor test that placed the focus on which party – the employer or the intern – was primary beneficiary of the internship. To answer that question, the court analyzed whether the internship was primarily for the educational benefit of the intern or for the financial, cost-saving benefit of the employer. In January, the DOL issued a new guideline that adopts the flexible seven-factor primary beneficiary test.
The seven factors are: the intern and employer both must clearly understand the position provides no compensation, the internship training is similar to that of an educational environment, the internship is tied to the intern's coursework or academic credit, the duration is limited, the intern complements – rather than displaces – the work of a paid employee, and there is no expectation of a paid job at the end of the internship.
No single factor is, by itself, dispositive. The failure to meet any one or more of the seven factors does not automatically mean that the internship is not primarily for the educational benefit of the intern. Yet, to help establish the intern is the primary beneficiary under the seven-factor test above, there are a few actions employers may wish to take.
• First, when posting for an internship, the ad should indicate college students who can earn college credits are given priority.
• Second, when offering the intern position to the selected candidate(s), the offer letter should expressly state that the position is not paid and there is no guarantee that the intern will receive paid employment with the employer in the future.
• Third, if possible, the employer should implement a formalized internship program which details all aspects of the internship, including duration, precise start and end dates, and a detailed schedule of any rotations, etc. within the organization to occur during the intern's tenure.
Joseph T. Bartulis, Jr., is chairperson of the Labor and Employment Law Practice Group at Worcester law firm Fletcher Tilton.
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