Whether it is the New Yorker, W Magazine, NBC, Fox Searchlight Films and “Black Swan,” or even Sean “Diddy” Combs, many employers have been facing lawsuits by former unpaid interns, asserting that their unpaid internships were unlawful and in violation of the Federal Labor Standards Act and California Law.  Even minor or unintentional noncompliance with California labor and employment laws can subject employers to liability for overtime and/or minimum wage violations.

California’s labor and wage/hour laws are notoriously convoluted, making it difficult to know whether the job duties assigned to interns crosses the line into making the internship more “illegal” than legal.  With that said, there are certain guidelines that can help determine whether an unpaid internship should really be unpaid, or whether it should be better classified as a paid employment.

Federal Laws

According to the Department of Labor, internships at for-profit, private sector employers (meaning, virtually all small, medium, and large businesses) should almost always be paid at least minimum wage, and offering employment to interns as “unpaid internships” can usually end up resulting in a violation of labor laws. There are six (6) factors that have been enumerated to help employers deal with whether unpaid internships can be offered without violating federal labor laws.  In order for an intern to qualify as an “unpaid” intern exempt from federal labor laws:

  • The internship must be “similar to training” that would be given in an “educational environment”;
  • The internship and training must be “for the benefit of the intern”;
  • The intern must not “displace regular employees,” but must instead work “under close supervision of existing staff”;
  • The employer must derive “no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded”;
  • The intern is “not necessarily entitled to a job at the conclusion of the internship”; and
  • There is a clear understanding between the employer and the intern that the intern is “not entitled to wages for the time spent in the internship.”

California Law

Furthermore, the California Division of Labor Standards Enforcement (DLSE) has in the past set forth five (5) additional factors that help determine whether an unpaid internship violates California labor laws:

  • Any internship should be part of an “educational curriculum”;
  • The interns should not receive “employee benefits”;
  • The training received by interns should be general “so as to qualify the [interns] for work in any similar business, rather than designed specifically for a job with the employer offering the program”;
  • The screening process for interns should be based on “criteria relevant for admission into an independent educational program”; and
  • Advertisements or postings for internships should clearly describe the positions as educational or training-based rather than as employment.

Does the Internship Violate Labor Laws?

The factors above, though instructive, still leave a lot of gray area in determining whether an internship is unlawfully unpaid, and whether the intern deserves at least minimum wage. Here are some points that should be evaluated to determine whether the internship truly is an “internship,” or an unlawful substitution for paid employment:

  • Tasks Assigned. Are the tasks assigned more similar to classroom/training experiences, or consist of traditional work projects? Does the employer provide interns with “general” experience, or assignments/duties specific to that employer’s operations. If the intern is materially helping business operations, they probably are not considered an intern.
  • Supervision. How is the intern supervised? Does the intern report to a specific individual, and if so, what is the supervisor’s role? Are there weekly meetings during which the intern is given “educational-style” feedback? Are there any faculty or professors who will be sharing in the duties of supervising the intern in the work setting? The more the experience is akin to an educational experience, the less likely it is that the internship is illegal.
  • Menial Tasks. Are interns performing menial tasks, such as filing, mailings, data entry, answering phone calls, serving as receptionists, etc., that are primarily for the benefit of the employer, and not the intern? This factor would cause the internship to look more like unpaid employment, which is not legal, rather than an internship. The federal and state agencies evaluate whether the intern benefited more from the internship than the employer.
  • Duration. Is the internship ongoing? Or does it have a definitive start and end date? Most internships track semesters/quarters, or are offered over summers, so an open-ended internship can give the impression that it is employment in disguise. If you set up an internship, it should be categorized as a “summer” or “semester-based” internship.
  • Intern’s Course of Study.  Is the work being provided to the intern part of that intern’s course of study, meaning, will the intern actually gain any benefit from the tasks being provided to them? The more distance there exists between an intern’s educational or career prospects, and the work being given to them, the more it may appear as though the internship is simply an attempt to gain an advantage of labor without payment of minimum wages.
  • Job Opportunity.  Is there any expectation that a job will be awaiting the intern after completion of the training or their schooling? If yes, it may be an unlawful internship.  Internships must usually make it clear to the student that no job is guaranteed once they finish school or complete the internship.

Getting Legal Help


AXIS Legal Counsel’s provides legal advice to numerous businesses throughout California with a variety of legal matters, including employment, employee relationships, labor law, and wage/hour matters, as well as compliance with California’s numerous employment and labor laws. We have assisted clients develop employment policies, become compliant with California’s wage and hour laws, prepare employee handbooks, management agreements, employment agreements, independent contractor agreements, and numerous similar labor law and employment legal matters. We have also represented clients in litigation matters involving employee and independent contractor disputes, mediations, lawsuits, and arbitrations. For information on retaining AXIS Legal Counsel to represent your business in connection with any legal matter, contact info@axislegalca.com or call (213) 403-0130 for a confidential consultation.

Top Downloads/Resources


Check out our complete line of handy forms and templates for California small businesses.

Submit a Question


Have a question that is not answered? Submit your question below so we can help other businesses by contributing to the knowledge base.

 

ConsultTeaser

Top Business FAQs

Top Labor & Employment FAQs

Visit Entire Business FAQ Library

Latest Business Representations

BusinessListTeaser