On January 5, 2018, the United States Department of Labor (USDOL) relaxed its test for determining whether or not interns must be considered employees under the Fair Labor Standards Act (FLSA), adopting the court-favored “primary beneficiary test” set forth in Glatt v. Fox Searchlight Pictures Inc. and rescinding agency guidance from 2010. Under the Glatt test, which considers seven, non-exhaustive factors regarding the “economic reality” of the employer/intern relationship, employers would be allowed to forego providing minimum wage and overtime to unpaid interns as non-employees if properly classified.
Several circuits, including the Ninth Circuit, have adopted the Glatt test, which provides employers with some flexibility in staffing practices. However, given the USDOL’s shift to a more employer-friendly policy, consistent with the Trump Administration, state administrative agencies may be more aggressive in protecting the rights of employees. Employers must still be cautious when recruiting and utilizing “free labor” and continue to comply with all other applicable federal and state laws.Back to News and Information