Supreme Court decides you CAN have unpaid interns

Intern vs. employee

What makes an intern an employee?

Before the Second Circuit, the interns argued that an intern should be deemed an employee whenever the business receives an immediate advantage from any work done by the intern. The movie studio urged the adoption of a primary beneficiary test, whereby the tangible and intangible benefits to the intern are weighed against the intern’s contributions to the business’s operations.

The United States Department of Labor, intervening as amicus curiae, argued that interns must be paid as employees whenever the subject business fails to satisfy any of the six factors outlined in the DOL’s Intern Fact Sheet, which was issued in 2010 and relied upon by the district judge in the underlying decision.

Rejecting the tests proposed by the interns and DOL, the Second Circuit opted for the primary beneficiary test with its focus on the benefits that the intern may receive in exchange for any work and its flexibility in examining the economic reality that exists between the intern and the business.

Assessing an intern’s employee status

With this in mind, the Second Circuit presented a non-exhaustive list of considerations for the assessment of an intern’s employee status, including:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee — and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.