Jeffrey M. Landes, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s New York office, was quoted in Law360, in “Interns in the Trump Era: What Employers Need to Know,” by Braden Campbell. (Read the full version – subscription required.)
Following is an excerpt:
Unpaid internships don’t pose the same legal risks for employers as they did in the past, since the Trump administration has relaxed the federal test for assessing intern versus employee status. But … businesses that want to hire summer interns still need to be cautious. …
Suits alleging employers wrongly classified employees as unpaid interns were the class action du jour several years ago, as workers sued … for unpaid wages.
These suits were based on a six-factor DOL test for unpaid intern status. The test looked at several facets of the work relationship, including whether the purported intern was trained like they would be in an educational environment, whether the internship was for their benefit, and whether the employer derived an “immediate advantage” from their work. If any one factor went against the employer, it had to pay the worker.
“The result of that was, essentially, if [an internship] was anything more than shadowing, it would technically not satisfy the test,” Epstein Becker Green member Jeffrey Landes told Law360.
But these suits have died down in recent years following court rulings rejecting the six-factor test and the DOL’s January 2018 decision to adopt a new test letting employers get more out of the intern relationship. The economic turnaround may also have played a role in these suits’ decline, as employers may not be looking to cut corners like some were a decade ago, Landes speculated. …
The new test, known as the “primary beneficiary” test, examines whether unpaid interns get more out of the relationship than their employers.
It does so by analyzing seven factors, including the extent to which both parties understand that the work is unpaid, that the program is tied to a formal education, and that the work complements but does not displace paid employees’ work. The test directs courts to balance the factors, with no single element deciding whether interns are owed pay.
For a program to satisfy the new test, “the focus really has to be on the education component,” Landes said. This means the intern should be getting academic credit for their work, he said. Employers should avoid giving interns clerical tasks, and instead take them to meetings and seminars and otherwise expose them to the vocation, he added. …
The new standard is easier for employers to meet than the prior one. But trying to meet it may still be more trouble than it’s worth, Landes said.
“As an employment lawyer, I’m going to say the conservative approach is still to pay your interns,” Landes said. “You provide minimum wage … you have the flexibility of giving them educational tasks, because most internship programs are educational, but you also have more flexibility.” …
While employers may not be liable under the Fair Labor Standards Act if they satisfy the primary beneficiary test, their programs may still violate stricter state or local laws, giving employers yet another reason to pay their interns.
Paying workers a wage is not necessarily a panacea for avoiding wage suits, however. Landes said employers will almost always want to give paid interns overtime, as it’s unlikely they perform the sort of work that makes certain managerial or self-driven workers overtime-exempt. This means including mandatory company events on their time sheets.
Employers should also recognize “the natural inclination of someone in college, who’s trying to make a name for themselves, is not to leave right at 5,” and insist they report every hour, he said.
