DOL Ditches Six-Factor Intern Test

Federal government adopts 2nd Circuit’s more holistic ‘primary beneficiary test’

The U.S. Department of Labor is taking a cue from the courts and softening up the intern test they had described as “too rigid.”

The DOL announced Jan. 5 that it would apply a test that would be more lenient toward for-profit employers when determining whether, under federal law, an unpaid intern is actually an employee entitled to minimum wage and overtime pay. In recent years, it was common for employment attorneys to warn employers against using unpaid interns, mostly due to the DOL’s narrow criteria and the risk of class-action wage-and-hour lawsuits. The department’s new test, however, may not necessarily reopen the floodgates to unpaid internships, employment attorneys say.

Previously, for-profit employers had to satisfy six different factors in order for their workers to be considered un-paid interns exempted from the Fair Labor Standard Act’s minimum wage and overtime pay requirements. Among other criteria, the employer had to show that those workers didn’t displace any of its regular employees and that it didn’t enjoy any immediate benefit from the interns’ work.

But that “six-factor test” hasn’t fared well in federal courts, nor has the wave of class actions that asserted it. In 2015, the U.S. Court of Appeals for the 2nd Circuit rejected the test in Glatt v. Fox Searchlight Pictures, Inc. et al. and Wang v. Hearst Corp. The court instead offered up the primary beneficiary test, with seven non-exhaustive factors, which the DOL is using going forward. The 9th Circuit preferred this test in a ruling last month in Benjamin v. B & H Education, Inc., which concerned cosmetology students. It was the fourth court to reject the previous test.

To read this story and other complete articles featured in the January 22, 2017 print edition of Law Week Colorado, copies are available for purchase online.