Article: Labor Department adopts stricter rules on difference between interns and employees
By Sean Higgins
Source: Washington Examiner
MPACE Review: January 2018
Summary: Sarah A. Roeder
The following summary reviews the article “Labor Department adopts stricter rules on difference between interns and employees” by Sean Higgins. The article summary below gives an overview of how the Department of Labor is creating stricter rules that differentiate interns from employees. The full article can be viewed at the following web address: www.washingtonexaminer.com/labor-department-adopts-stricter-rules-on-difference-between-interns-and-employees/article/2645146
The department of labor has stated it will drop its current six-point test in favor of a broader seven-point test that several federal courts have already endorsed. This change in standards will mean employers will have to raise the bar to prove interns are truly just that. It will also provide further flexibility for the division’s investigators to analyze internships on a case-by-case basis:
- The Department of Labor is now aligning its ‘primary beneficiary’ test with that of the appellate court rulings that determine ‘whether interns are employees under the Fair Labor Standards Act’. The Wage and Hour Division will also update its enforcement policies, creating alignment with recent case law and getting rid of superfluous confusion between the regulating divisions. This will also grant division investigators broader flexibility when looking into ‘intern vs. employee’ claims, allowing for more of a case-by-case analysis.
- In the past, class-action cases came before the 2nd Circuit Court of Appeals in 2016 as well as in the 9th Circuit in 2017 (Glatt v. Fox Searchlight Pictures, Benjamin v. B&H Education, respectively) were brought on from past interns, stating that they were doing the working of the employees and therefore deserved pay and other benefits. In both class-action cases, it was argued that the six-point test was too restrictive, and the courts agreed- leading to adopting new standards that focused on ‘whether the internship was primarily educational.’ This can include: if training received by intern reflects what they would get in the classroom, if it complements the school year and whether the intern duties can be proved to have “significant educations benefits”. Ultimately, the “test allows courts flexibility in examining the economic reality between intern and the employer.”
- The new standards are as follows:
- 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.
- 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.
- The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
- The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
- The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
- 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.
- 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.
Implications for Career Center Professionals
- As we continue to see an influx of unpaid and paid internships across multiple industries this will be a great guideline to stick to as we determine legitimate internships from those that can be harmful to students or create legal issues for the employer. This will also be a guiding compass on legal and best practices, as companies seek guidance on how to best build an internship program.
Implications for Recruiting Professionals and Employers
- Though it hasn’t changed how dialed in a company must be to clearly draw the line between interns and employees, employers should view this shift as an overall positive change- The new rules allow to fall more closely in line with modern realities of the business world and make it simpler to satisfy.
- This holds true as career centers historically review internship opportunities using DOL guidelines. This now allows career centers who are reviewing internships, to feel more flexibility to do so on a case-by-case basis, utilizing the seven factors mentioned above. Employers should view their internships with the same lens the division uses: what is the ‘economic reality’ of the relationship? Examples where this change is a positive is for start-up companies that are offering great learning internships in unique spaces and roles but may not be as structured (yet) as a corporation with a 15 year old internship program. Having said that, employers should take caution and always seek counsel with their legal teams when reviewing existing or starting new internship programs for their company and be sure their program have clear policies and consistent oversight. Remember, who is the internship benefiting and is it educational to the student?