The DOL has replaced its six-part test for unpaid interns in favor of the primary beneficiary test, which has been used by several federal appellate courts.

The primary beneficiary test has a more flexible approach, focusing on whether the intern or the business benefits more from the relationship.

The primary beneficiary test looks at the “economic reality” nature of the employment relationship and includes seven factors to consider. However, unlike the six-part test, these factors provide only a reference frame to determine who is benefiting more from the intern-employer relationship. Not every factor must be met, and not all factors must be given the same weight during the analysis. Instead, the courts will consider these seven factors and evaluate whether, in the totality of the circumstances, the employer is benefiting more from the relationship than the intern is.

When an employer is the primary beneficiary of the relationship, the intern is an employee for purposes of the FLSA. When the intern is the primary beneficiary, he or she is not considered an employee under the FLSA.

Refer to the below compliance bulletin for detail on the seven factors, and contact your NEEBCo representative with questions.

DOL Announces New Standard for Unpaid Interns