One of the hot-button topics these days among employment lawyers is the question of when someone who is learning a new field can be classified as an intern who does not need to be paid, and when the law requires that the worker be paid. The U.S. Department of Labor has relied heavily on a seventy-year old decision by the U.S. Supreme Court in issuing guidelines for determining when someone can work as an unpaid intern. The Eleventh Circuit Court of Appeals (responsible for Georgia, Alabama and Florida) has followed the lead of some other Circuit courts and rejected the Department of Labor’s standards, instead issuing new guidelines for determining when someone is properly classified as an unpaid intern and when the person must be classified and paid as an employee.
The multi-factor test announced by the Eleventh Circuit is designed to establish whether the employer or the worker is the primary beneficiary of the arrangement. In a nutshell, if the primary beneficiary of the arrangement is the employer, then the worker should be classified and paid as an employee. If the primary beneficiary is the worker, then classification as an unpaid intern may be permissible. (The worker can still be paid, but payment of wages would not be required by law.)
The following factors, considered together, can be expected to resolve the primary beneficiary question. While it is possible that different factors will point in a different direction, the totality of the circumstances should enable the court to determine the primary beneficiary, which will enable the court to determine whether the worker must be paid.
The factors are:
- · Existence of a promise or expectation of compensation during the internship;
- · Existence of a promise or expectation that the worker will be hired at the conclusion of the internship;
- · Whether the training is similar to that which would be provided in an academic setting;
- · Whether the internship is a component of an academic program, such that it either integrates coursework or provides for academic credit;
- · The extent to which the internship aligns with the academic calendar;
- · The extent to which the internship is limited in duration to the period of time in which the intern is provided beneficial learning; and
- · The extent to which the internship complements or displaces paid employees while providing educational benefits to the intern.
The application of these factors to specific situations will be bound by the specific facts of those situations. The court’s ruling suggests that some of these factors may be more persuasive than other factors in certain situations. In other words, while these factors provide helpful guidance, it is not possible to use them to draw a bright line test to determine when someone should be classified an employee and when someone may be classified as an intern. Businesses that are considering engaging unpaid interns should consult with counsel before proceeding. And workers who believe that they should be paid for services they have provided as unpaid interns may wish to discuss the specifics of their situations with counsel.
The analysis set forth in this article is provided for general understanding only and should not be considered legal advice. Counsel should be consulted regarding any specific legal issues.