According to some, unpaid internships are arrangements that are beneficial to both sides. The employer receives useful work without having to pay wages. In exchange, the intern receives valuable industry experience and skills, helpful networking contacts, and an important resume-building piece. Under the Obama Administration, the U.S. Department of Labor enacted rules that made it harder for employers to bring in interns or apprentices and not pay them. Now, new rules created earlier this year by the Department of Labor may have the effect of broadening the range of internships that can permissibly be unpaid. Regardless of whether you interned under the old rules or will be interning under the new ones if you think that your employer has improperly failed to pay you for your work, you should consult an experienced New Jersey wage and hour attorney.
Previously, under rules established in 2010, the department had erected a six-part test for when an employer may pay an intern nothing. Under the old rules, an unpaid internship needed to meet all six of the factors to be legally permissible. This set of a half-dozen standards required internships to be “similar to training that would be given in an educational environment,” an experience created for the benefit of the intern, a situation in which the intern did not replace paid employees, an arrangement in which the intern was not entitled to a job at the internship’s end, and an arrangement in which both sides understood that there would be no pay.
Additionally, the old rules required that the “employer derived no immediate advantage from the intern’s activities.” This factor was, in many courts’ view, relatively restrictive and greatly narrowed the number of internships that validly qualified as being something for which the employer could pay the intern nothing.
The department recently announced new rules that focus on the “economic reality” of whether the intern or the employer is the “primary beneficiary” of the intern’s work. The department laid out a seven-item list for the “primary beneficiary test.”
The seven items include standards like the level of clear understanding between intern and employer about the lack of expectation of compensation. (If the employer made any promises of compensation, whether express or implied, that intern potentially qualifies as an employee.) The new rules kept the old rules’ item that analyzed the “extent to which the internship provides training that would be similar to that which would be given in an educational environment.”
Gone from the new list is the “no immediate advantage” factor. The new list includes an item that calls for analysis of the “extent to which the intern’s work complements, rather than displaces, the work of paid employees.”
As opposed to the old rules, under which internships were supposed to satisfy all six factors in order to qualify as a valid unpaid internship, the new rules state that the primary beneficiary test is a flexible one in which no single one of the seven factors can automatically determine whether an internship qualifies as unpaid or must be paid. Instead, the outcome now “necessarily depends on the unique circumstances of each case.”
If you believe that you have been improperly denied wages or overtime pay, you should contact the knowledgeable New Jersey wage law attorneys at Phillips & Associates. Reach us online or at (866) 229-9441 today to set up a free and confidential consultation and to find out how we can help you.
More blog posts:
New Jersey Nursing Assistants Are Entitled to Pursue Overtime Case Despite Collective Bargaining Agreement’s Arbitration Clause, New Jersey Employment Lawyer Blog, Dec. 6, 2017
Federal Courts Reject Employer’s Attempt to Sidestep FLSA Break Rules By Calling Its Break Policy Flexible Time, New Jersey Employment Lawyer Blog, Oct. 26, 2017