With minimum wage going up, who will reap the benefits?

Q    Minimum wage is going up to $17.20 per hour for federal contractors on January 1, 2024. Does this require interns to be paid at the federal minimum wage rate, as well, or are they an exception?

The Executive Order increasing the minimum wage for federal contractors doesn’t provide any specific exception for interns. The increases apply to all employees of federal contractors.  Under the Fair Labor Standards Act (FLSA), interns and students may not be “employees,” in which case the FLSA doesn’t require compensation for their work. 

Courts have used the “primary beneficiary test” to determine whether an intern or a student is, in fact, an employee under the FLSA. As the U.S. Department of Labor’s Wage and Hour Division notes, courts “have identified the following seven factors as part of the test:

1.    The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.