Last month, the Ninth Circuit Court of Appeals became the fourth appellate circuit to reject the Department of Labor’s six-part test for determining whether internships at for-profit companies must be paid. The DOL test looked at a number of factors, including whether the work displaces that of paid employees, whether it is performed as part of an academic requirement, and whether the intern experience is more observational than participatory.

In place of this test, the Ninth Circuit and other appellate courts adopted the previous legal test that simply asks who is the primary beneficiary of the internship. If the intern primarily benefits from the experience, the internship can be unpaid. Apparently reading the writing on the wall, on January 5 the DOL acquiesced, announcing it is withdrawing the guidance that established the six-part test in favor of the primary beneficiary rule. This rule will be used by DOL to determine minimum wage and overtime claims brought by unpaid interns.

This decision will make it easier for companies to continue traditional unpaid internships. While wage claims brought by interns were never common, companies using their services should put together basic documentation regarding the internship program that demonstrates the academic or work-experience benefits provided to the interns.