For many high school and college students, unpaid internships are almost a necessity. According to a survey conducted by the National Association of Colleges and Employers, around 61 percent of graduating college seniors had an internship, although nearly half of all internships in the United States were unpaid. Unpaid internships are highly contentious among some because many involve students doing work that actual employees would do. In 2018, the U.S. Department of Labor gave unpaid internships its blessing, with a few requirements. Business owners should be aware of these requirements to avoid violating the Fair Labor Standards Act (FLSA).
The Primary Beneficiary Test
The primary beneficiary test is used by courts to help determine whether an intern or student is actually an employee who must be compensated for their work. The following seven factors are the criteria that courts use to make the determination:
- The extent to which the employer and the intern understand there is no expectation of compensation;
- Whether the internship provides training that would be similar to the training that would be given in an educational environment;
- Whether the internship is tied to the intern’s formal education program through integrated coursework or academic credit;
- Whether the internship corresponds to the academic calendar;
- Whether the duration of the internship lasts only as long as the internship provides beneficial learning;
- Whether the intern’s work complements (but does not displace) the work of paid employees; and
- The extent to which the intern and the employer understand the internship does not guarantee a paid job at the end of the internship.
Courts have stated the test is rather flexible because no two cases or internships are the same. If the test reveals an intern should actually be classified as an employee, then the intern is entitled to minimum wage and overtime pay, as per the FLSA....