As internship season ends, now is a perfect time for employers to review their internship programs to ensure compliance with federal, state and local labor and employment laws.
Internships are generally intended to be educational opportunities for students or recent graduates to learn invaluable on-the-job skills, how to effectively work in a specific environment and perhaps earn academic credit or supplement their education post-graduation. Depending on the purpose of the program and a variety of other factors, the internship may be paid or unpaid. In most cases, interns will be considered employees subject to minimum wage and overtime pay, as well as other "employment" obligations such as Workers Compensation, and Unemployment Insurance and federal and state tax withholding.
Under the federal Fair Labor Standards Act (FLSA), most interns are considered employees subject to the FLSA's minimum wage and overtime requirements. To determine whether an intern is an "employee" or can lawfully not be paid, the U.S. Department of Labor (DOL), has developed a seven-part test to determine whether an intern is considered an employee or not and who the "primary beneficiary" is of the employer-intern relationship.
The seven-factors of the "primary beneficiary test" are:
A Texas-based excavation and utilities company must continue to defend against a False Claims Act lawsuit alleging fraud under a pandemic-assistance program, even though the company lost its corpo...