One recent and notable intern-related lawsuit is known as the Black Swan case, which was filed by interns working on the production of the movie Black Swan. In the Black Swan case, a federal appellate court in New York (the Second Circuit Court of Appeals) rejected parts of the DOL’s strict criteria. The Black Swan court said the DOL’s approach was far too rigid. Instead, the court created its own test for determining whether an intern is an employee who is entitled to compensation. The court set out seven factors that need to be considered. While many of the court’s seven factors mirror the DOL’s criteria, there are four key distinctions which make the court’s approach more lenient than the DOL’s approach.

1. Not all the factors need to be met

First, the Black Swan court called its list of factors “non-exhaustive.” This means that unlike what the DOL says, not all of the factors need to be met. Rather, all the circumstances must be considered on a case by case basis. This makes the test more flexible and open to considering the farmer’s intentions and the reality of the intern’s experience on the farm.

2. The intern must be the “primary beneficiary of the internship program

Second, the Black Swan court said that the determination of whether a worker is an intern or an employee entitled to compensation ultimately comes down to one question: Who is the primary beneficiary of the relationship? Or, who benefits the most from? To be a non-employee intern, the intern and not the farmer must be the primary beneficiary of the internship program. Basically, if the farmer is the primary beneficiary, it’s looking a lot more like an employee. This would be the case if the farmer gains significant profits or other rewards from the intern’s free labor and isn’t going out of her way to train the intern.

On the other hand, if the intern is the primary beneficiary, the intern is not an employee. The intern may benefit the most by getting a wealth of knowledge and experience through robust classroom and hands-on training.

3. The employer can benefit from having an intern

Third, unlike what the DOL says, the Black Swan court said that the employer can in fact benefit from having an intern. That is, so long as the intern is the primary beneficiary of the relationship. Under the Black Swan court’s test, the intern can do significant work on the farm, including tedious tasks like weeding and harvesting for long hours that ultimately help the farm improve profits.

That is, so long as the intern’s training is the number one priority. This makes it somewhat less of a burden to have an internship program. But this begs the question. How do you really know who benefits most? The answer is the extent and quality of education.

4. Education must be the focus of the internship

The Black Swan court really emphasized the education dimension of the internship. Like the DOL, the court said that it’s more likely the intern is not an employee if the training offered is either tied to the intern’s formal education program, such as through course credit, or if the type of training is similar to what an educational institution provides, such as clinical or hands-on training. Having ties to an educational institution is an important risk management step when building a non-employment intern program.

Because education is an important part of any non-employment intern program, the structure of the position matters. Farms that accommodate a worker’s formal academic commitments, such as offering the intern position in the summer when school’s not in session, use a set curriculum, and offer a limited term position will have an easier time arguing that the intern is not an employee. If the intern is not an employee they are not covered by employment laws.