In the last several years, there have been numerous highly visible wage and hour class action lawsuits brought by interns claiming they were misclassified and thus entitled to wages for their work as employees. Some of the targets of these lawsuits included Fox Searchlight, Hearst Magazines, NBC Universal, Atlantic Records, Warner Music, designer Norma Kamil, Gawker Media, L.L.C., and Charlie Rose. Indeed, in response to these lawsuits, many companies ceased their unpaid internship programs.
In welcome news for businesses, the U.S. Department of Labor (DOL) in January 2018 implemented a significant change in its interpretation of the Fair Labor Standards Act (FLSA) with respect to the applicable test to determine internship status. As a reminder, prior to the change, DOL utilized a six factor test requiring all six factors to be present in order to properly classify an individual as an intern. These factors were:
• The internship is similar to training that would be given in an educational environment.
• The internship experience is for the benefit of the intern.
• The intern doesn’t displace regular employees and works under close supervision of existing staff.
• The business doesn’t derive an immediate advantage from the intern’s activities—and on occasion the employer’s operations may be impeded by the intern’s activities.
• The intern isn’t guaranteed a job at the end of the program.
• The business and the intern each understand that the internship is unpaid.
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