Unpaid Interns and Trainees: Legal Insight Updated to Reflect New 8th Circuit Ruling

Author: Michael Cardman, XpertHR Legal Editor

The US Department of Labor (DOL) uses a six-factor test to determine whether an intern or trainee qualifies as an employee under the Fair Labor Standards Act (FLSA) and thus must be paid at least the federal minimum wage and overtime for all hours worked beyond 40 in a workweek.

However, some federal appeals courts apply a less-stringent standard drawn from the Supreme Court's ruling in Walling v. Portland Terminal Co., +330 U.S. 148 (U.S. 1947).

On May 5, the 8th Circuit Court of Appeals ruled that tax professionals were not employees of the tax preparation company H&R Block when they completed rehire training because H&R Block received no immediate advantage from their training. Petroski v. H&R Block Enters., +2014 U.S. App. LEXIS 8291 (8th Cir. 2014).

The 8th Circuit -- which has jurisdiction over employers operating in Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota and South Dakota -- cited the DOL's six-factor test as "support" for its findings. However, the appeals court based its ruling mainly on the above-mentioned Walling standard. Notably, the 8th Circuit also did not state that the six-factor test is entitled to deference.

As a result, the 8th Circuit left the door open for future cases in which the facts might weigh in favor of the employer under the Walling standard but not under the DOL's six-factor test.

The Legal Insight Unpaid Interns and Trainees Under the FLSA has been updated to reflect this new ruling.