In January of 2018, the U.S. Department of Labor (DOL) adopted a new primary beneficiary test for determining internships of for-profit employers.  Defining internships under the federal Fair Labor Standards Act (FLSA).  Under the old and new primary beneficiary test, interns and students might not be defined as employees.  Non-employee cases, organizations would not have to compensate these students and interns for work performed, during their time at the internship or for projects they complete.  The new test as defined by the courts, is a flexible test, with no single, determining factor.  Each case will be reviewed on its unique basis and duties.

The seven factors of primary beneficiary test for unpaid interns and students:

  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.”[i]

Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act

Old Six Factor Test

SHRM Recommendations for Unpaid Internship:

  1. “We recommend employers get something in writing, preferably with the school as well, that lays out everybody’s expectations,” Orr said. “You’d want to consider having something in writing that says there will be no expectation of compensation, that the internship will be limited to a period of beneficial learning and that there is no promise of a job at the end. If you get acknowledgment of those three things in writing and you follow through on them, you will be in good shape.
  2. If they are in a formal education program, find out if they can get credit for the internship,” Olson agreed. “If the person will get academic credit for the internship, that is very supportive of the internship being to the primary benefit of the intern.”[ii]
  3. Knowledge of local and state legislation is necessary for any HR professional or business owner. Many states follow the old six factor test or have another test, similar to the old six factor test.  This means organizations can fall under both federal and state jurisdiction on FLSA legislation and pay vs. unpaid internship obligations.  “In those cases, employers must typically follow whichever law is most generous to workers.”[iii]

NY State Wage Requirements for Interns in For-Profit Businesses

Wage Requirements for Interns in Not-For-Profit Businesses

My research shows Pennsylvania using the old 6-factor test

These changes can impact your organization.  Many colleges and universities offer credit for internships, work with the career services office prior to hiring an intern and fully the process.  Ensure a contract is in place, agreed upon and expectations are clearly communicated from both the school and workplace.  If your organization does hire an intern, provide feedback throughout to both the intern and academic institution.  In my experience, there is a feedback evaluation form to complete at the end of the internship, as part of the credit approval process.  Students can also be required to write a paper or keep a journal of experiences.  If you are confused on the new requirements, seek guidance.  Ensure that your organization is compliant under all laws.  If you can afford to pay an intern, great.  We all see the amounts of debt students are saddled with upon completion graduation and non-completion.  However, experience paid or unpaid will add value to both academic and professional opportunities for any student.

[i] https://www.dol.gov/whd/regs/compliance/whdfs71.htm

[ii] https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/unpaid-internships-new-dol-intern-test.aspx

[iii] https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/unpaid-internships-new-dol-intern-test.aspx

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Published by Mathew W. Burr, MJ-LEL, MBA, MHRIR, GPHR, SHRM-SCP, SPHR, CPHR-INT, Chartered CIPD

Mathew W. Burr, MJ-LEL, MBA, MHRIR, GPHR, SHRM-SCP, SPHR, CPHR-INT, Chartered MCIPD Lean Six Sigma Black Belt ABOUT: Matthew Burr has over 18-years of experience working in the human resources field, starting his career as an Industrial Relations Intern at Kennedy Valve Manufacturing to most recently founding and managing a human resource consulting company; Burr Consulting, LLC, Talentscape, LLC and Co-Owner of Labor Love, a Labor, and Employment Law poster printing company. Prior to founding the consulting firm, the majority of his career was heavy industry manufacturing and healthcare. He specializes in compliance auditing, training labor and employment law, conflict resolution, performance management, labor, and employment relations. Matthew has a generalist background in HR and operations, while providing strategic HR and operational solutions to his clients, focusing on small and medium sized organizations. He works as an Adjunct at Alfred State University, Tompkins Cortland Community College, and Montgomery Community College. He successfully designed an HR Concentration in the business management major that aligned with both SHRM and HRCI certifications, providing opportunities for students to sit for both the SHRM-CP and aPHR certifications upon completion of the degree, concentration, and internship hours as an Assistant Professor of Management at Elmira College (Retired January 2022). Matthew is also the SHRM Certification Exam Instructor, with a current pass rate of 92% on the SHRM-SCP and 83% pass rate on the SHRM-CP and a combined 88% on both exams over a 7-year period of instructing the course (Elmira College, Collin College & The College of St. Rose). Matthew works as a trainer at Tompkins Cortland Community College, Corning Community College, Broome Community College, and HR Instructor for Certification Preparation for the Human Resource Certification Institute (HRCI). He also acts as an On-Call Mediator and Factfinder through the Public Employment Relations Board in New York State, working with public sector employers and labor unions. PUBLICATIONS: Matthew has over 70+ publications including, American Bar Association (ABA) Experience Magazine, Cornell HR Review, Business Insider, New York State Bar Association (NYSBA), PayScale, Society of Human Resource Management (SHRM), and Expert 360 (in Australia). In early 2017, he published his first book, “$74,000 in 24 Months: How I killed my student loans (and you can too!),” proceeded by his second book, which was published in January 2021, “Slay the Student Loan Dragon: Tips and Tricks on How to Conquer the Student Loan Game” and his most recent book, “Unbox Your HR Career” in July 2023. VOLUNTEER WORK: Matthew is currently the New York State Society of Human Resource Management (NYSSHRM) District-Director. EDUCATION & TRAINING: Additional Training & Development:  SHRM Workplace Coaching and Mentoring Recertification Program, 2020  SHRM Foundation Employing Abilities @Work Certificate, 2020  SHRM Foundation Veterans at Work Certificate Program, 2018  Delta County Chamber of Commerce: Delta Force Leadership Program, 2013 FEATURED IN & ON: Matthew was featured on CNN Money, Fast Company, Fits Small Business, Fox News, Magnify Money, Monster.com, My Twin Tiers, Namely, Student Loan Hero, Smart Sheet and CEO Blog Nation, Human Resource Certification Institute (HRCI), Society of Human Resource Management (SHRM). Burr Consulting, LLC Capabilities Statement General Information: Burr Consulting, LLC Owner: Matthew W. Burr Mission Statement: “Strategically Aligning HR as a Partner for the Success of Your Business” Contact Information: Burr Consulting, LLC What's New in HR Blog Talentscape, LLC Labor Love, LLC (Labor Posters) The HR Support Center The Upstate HR Podcast (607)227-4386 Matthew@Burrconsultingllc.com Facebook: Burr Consulting, LLC LinkedIn: Burr Consulting, LLC Twitter: @Burrconsulting Online Certification Verification: Credibly Dun & Bradstreet (D&B) Number: 080776443 NAICS Codes: 541612, 923130, 54161, 541611, 541613, 611430, 541618, 561312, 561311 SIC: 8742, 8748, 9441, 8748001, 8748026 Our Services HR MANAGEMENT New Hire Orientation; Temporary HR Support; Recruiting and Application Tracking; HR Compliance (ADA, FMLA); Employee Handbook; Policy and Procedure; HRIS; HR Audits; Job Profile Design and Revision; HR Key Performance Indicators; EEO Reporting and Classification; State Unemployment Insurance Services TRAINING & TRAINING DEVELOPMENT Organizational Development; Employee Relations; Workplace Violence; Harassment & Sexual Harassment; Union Awareness; Managerial EMPLOYEE & LABOR RELATIONS Employee Relations Training; Conflict Resolution; Mentoring; Workplace Investigations; Labor Contract Costing; Mediation & Arbitration Prep; Fact-Finding; Workplace Investigations; Coaching & Counseling; Performance Reviews; Contingency Plan Development; Contingency Plan Training; State of New York Public Employment Relations Board (PERB)PERB Mediation and Fact-Finding Panels (Albany, NY covering the Elmira, NY Area) HIRING & RECRUITMENT Applicant Tracking Systems; Metric Development; Interview Training; Workforce Planning; Recruitment; Interviews; Job Offers; New Hire Process POLICY & COMPENSATION Group Plans – Healthcare, Dental, Vision, Group Life, Short- and Long-Term Disability; Retirement – 401(k), Profit Sharing, Roth; Workers Compensation; Total Compensation Design and Strategy; Deferred Compensation Plans; Salary Surveys; Reward Systems; Online Payroll; Customized Payroll Processing; Employee Self Service; Customized Reporting HR COMPLIANCE MATERIALS Burr Consulting, LLC is excited to announce a new partnership with Labor Love LLC, expanding our services to include HR printed materials compliant with industry standards.

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