U.S. Department of Labor Issues New Rules Regarding When FLSA Covers Interns in New Jersey

Summer Intern SessionInternships often allow students to gain “real world” experience before entering the job market, but they have been a subject of controversy in the area of employment law. New Jersey labor law provides a statutory test for determining when an individual may be considered an intern, who is not necessarily protected by state wage and hour laws, and when they are an employee who should receive a paycheck. N.J.A.C. § 12:56-2.1. The federal Fair Labor Standards Act (FLSA) does not expressly define the difference between an intern and an employee, so the job of interpreting the statute goes to the Wage and Hour Division (WHD) of the U.S. Department of Labor. In January 2018, the WHD issued Field Assistance Bulletin No. 2018-2, which sets forth a new test for determining, in claims involving federal law, when an intern is actually an employee.

The FLSA governs the payment of wages to employees and the hours they may be expected to work, including provisions for minimum wage and overtime compensation. It defines an “employee” as “any individual employed by an employer.” 29 U.S.C. § 203(e)(1). The statute’s equally unhelpful definition of “employ” is “to suffer or permit to work.” Id. at § 203(g). It does not provide a definition for “intern” or “internship.” The commonly accepted definition of an internship is a temporary position that allows a student to gain experience in a particular field. The actual job description of an internship varies widely from one industry and one company to another. Interns in one company might spend much of their days getting coffee and running other errands, while interns in another company might gain hands-on experience in the profession of their dreams. Internships are often unpaid, based on the rationale that interns gain experience and connections that will help them start their careers.

The WHD established a six-part test for determining whether an individual is an employee under the FLSA in 2010 in a document entitled Fact Sheet No. 71. While the WHD has since updated that sheet on its website to reflect the new test, some court decisions evaluating the old test include its original text. The test considered whether the internship (1) was similar to instruction the intern would receive at school, (2) primarily benefited the intern rather than the employer, (3) did not displace existing workers, (4) provided “no immediate advantage” to the employer from the intern’s activities, (5) included no promise of a permanent job, and (6) involved an understanding between both parties that no wages were to be paid. Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528, 534-35 (2d Cir. 2016). An intern is not an employee if all six questions are answered in the affirmative.

The WHD notes in the fact sheet that several courts have declined to follow this rule. The Second Circuit, for example, described the test as “too rigid for our precedent to withstand.” Id. at 536. That court, and others, have preferred the “primary beneficiary test,” which the WHD describes as an analysis of “the ‘economic reality’ of the intern-employer relationship.” This seven-part test is similar to the prior test, but it includes questions about whether the internship accommodates the intern’s school obligations and whether it is directly tied to the intern’s coursework.

If you need to speak to an employment lawyer about a dispute in New Jersey or New York, contact the Resnick Law Group today online, at 973-781-1204, or at 1.888.863.3423.

More Blog Posts:

The Rights of Unpaid Volunteers and Interns in New Jersey Employment Law, The New Jersey Employment Law Firm Blog, November 10, 2017

New Ordinance Closes Loophole Preventing New York City Unpaid Interns from Asserting Rights Against Workplace Harassment, The New Jersey Employment Law Firm Blog, April 18, 2014

Unpaid Intern Lawsuits Seek to Enforce Wage and Hour Laws, The New Jersey Employment Law Firm Blog, May 9, 2013

Photo credit: NASA Goddard Space Flight Center [CC BY 2.0], via Flickr.

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