New test for Employers regarding Summer Internship

The Department of Labor (DOL) implemented a new test for determining when interns are employees who must be paid in accordance with the Fair Labor Standards Act (FLSA). The new rules went into effect on January 5, 2018. These new guidelines allow employers to be more flexible with their internships.  

Here was the Old “Six Factor” Test:

1. The internship is similar to training that would be given in an educational environment.
2. The internship experience is for the benefit of the intern.
3. The intern doesn’t displace regular employees and works under the close supervision of existing staff.
4. The employer doesn’t gain an immediate advantage from the intern’s activities—and on occasion, the employer’s operations may be impeded by the intern’s activities.
5. The intern isn’t guaranteed a job at the end of the program.
6. The employer and the intern each understand that the internship is unpaid.

Here is the New “Seven Factor” Test:

1. Both parties understand that the intern is not entitled to compensation.
2. The internship provides training that would be given in an educational environment.
3. The intern’s completion of the program entitles him or her to academic credit.
4. The internship corresponds with the academic calendar.
5. The internship’s duration is limited to the period when the internship educates the intern.
6. The intern’s work complements rather than displaces the work of paid employees while providing significant educational benefits.
7. The intern and the employer understand that the internship is conducted without entitlement to a paid job at the internship’s end.

Documentation

Both the student intern and the business should sign agreements incorporating the above language. By providing an offer letter with the seven test understanding will provide no dispute and companies will secure potential liability.

Re:Smith, J.D. (1/9/2018). SHRM. Will DOL’s New Intern Test Revive Unpaid Internships?