Summer internships are everywhere these days. Many employers will take on unpaid interns, often as a favor for a friend or to get some extra help around the office. And everyone seems to have a general idea of what an intern is – a young person, generally a student, who works for experience and, sometimes, school credit. This definition, however, overlooks what is often the key factor in determining whether an unpaid intern is actually an employee who must be paid: Who benefits from the intern’s work?
If the answer is that the employer is the only one who benefits, then you have an employee who you should pay. For most employers, the answer will be either, “the interns: they learn, and my employees are spending time teaching them,” or, “well, we both benefit.”
Under guidance provided by the Department of Labor prior to 2015, the only acceptable answer was that the intern benefits, and “[t]he employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded.” This was the key factor in a six-factor test the DOL gave employers and courts to use in determining whether an unpaid intern is to be treated as an employee who must be paid.
In 2015, a Second Circuit case, Glatt v. Fox Searchlight Pictures, Inc., put forth a new test: “whether the intern or the employer is the primary beneficiary of the relationship.” The court specified a non-exhaustive list of seven factors asking (paraphrased):
- Any promise of compensation?
- Training similar to an educational institution?
- Tie between internship and formal education?
- Corresponding to the academic calendar?
- Duration limited to while the intern is learning?
- Intern’s work does not displace the work of paid employees?
- No promise of paid job at the conclusion of the internship?
The DOL’s current guidance adopts this standard and these factors. Unfortunately, that’s not the end of the story. Many states maintain statutes or guidance that focus on the prior standard.
The Connecticut law applying workplace harassment and discrimination protections to interns (i.e., Conn. Gen. Stat. § 31-40y) requires that the internship provide no immediate advantage to the employer. As definitions contained in one statute can often be used in another, a disgruntled intern could claim that she or he provided a small advantage to the employer under this statute.
Rhode Island, New York, and Massachusetts all similarly provide guidance with the “no immediate advantage” language. The guidance provided by a state department of labor does not equal that state’s law, but the continued prevalence of the “no immediate advantage” standard means employers should be cautious.
A New York judge, in the 2016 case of Rodriguez v. 5W Pub. Relations, LLC, observed that the standard in New York is uncertain, but “whichever test the court adopts, it will be a test that balances a number of factors and one that takes into consideration both the benefit of the work to the employer and the experiences of the individual intern, similar to the test adopted by the Second Circuit in Glatt … and will not be the [old] Department of Labor’s six-factor test which focuses solely on whether the employer receives an immediate advantage from the interns’ work.” This demonstrates that courts may pull the federal standard, or something like it, into state courts.
Unfortunately, the disconnect between federal and state standards creates uncertainty for employers. Evaluate the educational benefits the interns are provided and whether they are treated in the same manner as employees. Look at the Glatt factors, and the guidance from your state as to who is really benefitting from the internship. To be safe, it should not be a close call.
The information contained in this article is general in nature and offered for informational purposes only. It is not offered and should not be construed as legal advice.
(photo courtesy of career.uconn.edu)