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Unpaid interns may not enjoy protection under anti-discrimination laws

The Tenth Circuit held that an unpaid intern did not enjoy any protection under Title VII (the nation’s leading anti-discrimination and anti-retaliation law). Congress wrote such laws to protect “employees,” and the Court reasoned an entirely unpaid intern failed to meet a threshold test for proving he or she is an employee because such an intern receives no “remuneration” from the putative employer.

In this case, the plaintiff held an unpaid internship at a hospital as part of her school’s requirement that she complete at least 480 hours of such an internship. She was not paid. She argued that she, nonetheless, received “remuneration” because the internship helped meet her credit requirement and also because many interns found jobs later with the same companies. The Tenth Circuit rejected the idea that either constituted “remuneration.”

Ms. Sacchi has cited no cases, nor could we find any, where only a professional certification and pathway to employment satisfied the threshold-remuneration requirement.

We also decline the invitation to conclude that all interns are protected by Title VII, the ADA, and the ADEA. Aplt. Br. at 24-27. Even if a laudable goal, this is a task for Congress.

Employers are cautioned that a different law, the Fair Labor Standards Act, requires interns to be paid in many circumstances.

Source: Sacchi v. IHC Health Services, Inc., 918 F.3d 1155 (10th Cir. 2019).

DOL adopts Primary Beneficiary test for interns under FLSA

The U.S. Department of Labor has adopted the Primary Beneficiary test for deciding whether an intern must be paid as an employee or can be treated instead as an unpaid intern. This brings the DOL into alignment with a number of circuit courts, including the Sixth, Ninth and Eleventh. The Primary Beneficiary test is generally seen as more favorable towards employers and students who wish to be treated as unpaid interns.

The Primary Beneficiary test asks, given the “economic reality” of the relationship, whether the putative intern or the company is the real “primary beneficiary” of the relationship. When asking that question, the DOL and courts that follow this test consider the following seven factors (quoting new DOL Fact Sheet #71):

  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.