The Second Circuit Court of Appeals recently issued a decision rejecting the DOL’s 6-factor test for unpaid interns under the FLSA – now the Eleventh Circuit has issued a decision reaching the same result.
In Schumann v. Collier Anesthesia, P.A., the Eleventh Circuit confronted the issue of whether it should defer to the DOL’s guidance establishing a 6-part test for determining whether an intern qualifies as an employee for purposes of the FLSA. No. 14-13169 (11th Cir. Sep. 11, 2015). In deciding that the DOL’s 6-part test was not entitled to deference, the Eleventh Circuit closely followed the analysis adopted by the Second Circuit earlier this summer in Glatt v. Fox Searchlight Pictures, Inc. Like the Second Circuit, the Eleventh Circuit found that the DOL’s approach – which mandates that all 6 factors must be satisfied – was “too rigid.”
For example, the DOL’s test requires that the employer that provides the training must “not derive any immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded.” Yet, the Eleventh Circuit found that “there is nothing inherently wrong with an employer’s benefiting from an internship that also plainly benefits the interns.”
Instead of applying the DOL’s 6-factor test, the Eleventh Circuit held in Schumann that the appropriate standard was the more flexible “primary beneficiary” test adopted by the Second Circuit in Glatt. Under this standard, the focus is on ““whether the intern or the employer is the primary beneficiary of the relationship.” To aid in making this determination, courts consider a non-exhaustive list of seven factors, including:
- 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.
- 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.
- The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
- The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
- The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
- 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.
- 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.
Because the test is flexible, no single factor is dispositive. Rather, the court must weigh and balance all of the relevant circumstances, including potential other considerations not expressed in the seven factors.
Takeaway: The Eleventh Circuit’s decision in Schumann is another good decision for employers because it reflects a growing consensus that the determination of intern vs. employee status under the FLSA should be more flexible than the DOL’s preferred approach.