Although prior DOL guidance paid lip service to unpaid internships being permissible in the nonprofit sector, stating that unpaid internships for nonprofit charitable organizations were “generally permissible,” it also stated that DOL would review the need for more guidance in this area. Furthermore, this guidance was just that, not a formal regulation or law that courts had to follow. The DOL’s prior six-part test made it difficult for employers to establish unpaid internships, in large part because the test required that the employer derive “no immediate advantage from the activities of the intern.” For these reasons, many nonprofits were understandably hesitant to continue unpaid internships.
The DOL’s softened approach going forward utilizes a seven-factor “primary beneficiary test,” which analyzes the following factors:
The DOL will review each case individually and emphasizes that it is a flexible test, with no single factor being determinative.
With the new relaxed criteria for unpaid internships, nonprofits should be more comfortable establishing such programs. Nonetheless, to ensure compliance with FLSA, organizations should carefully develop and review all proposed internships to ensure the position will pass muster under the primary beneficiary test.
The revised DOL Fact Sheet is available online.