Thinking About Hiring (Unpaid) Interns in California?

Summer is just starting and that means there are thousands of California college and graduate students who are looking for work this summer.

If you are a California employer, you already know how valuable this labor force can be. Especially, in the tech industry as eager, young programmers can add a lot of value to your company.

If you are reading this article because you are thinking about bringing on interns you are in the right place.

But, how can do it legally?

This article provides a few tips, from a legal perspective, to get you started on the right foot.

What are Interns?

You probably know intrinsically what an intern is -- either because you have worked with multiple interns or because you were an intern no too long ago.

However, employers generally use the term 'intern' far too broadly.

The term intern was originally used medial and applied to students who had completed medical school and had a medical degree, but did not yet have a full license to practice medicine unsupervised and were therefore exempt from overtime and minimum wage rules.

Interns, in the contemporary sense, are usually in their teens or twenties and work at a temporary job that will provide 'real world' experience. While most interns are in college or have recently graduated, older adults who are changing career fields or obtaining degrees can also become interns.

There is no legal classification for interns for as we know them in our every day lives.

Rather, the federal Department of Labor will classify these workers as either 'employees' or 'trainees.'

How can I classify my intern asa trainee?

The Department of Labor (DOL) has articulated six key factors that must be met in order to avoid having an intern or trainee classified as employee.

The factors are:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

I know there is a chance that you skipped directly over the factors, so here is a (extra short) description of each factor.

1. Educational environment;

2. It benefits the intern;

3. Intern is closely supervised;

4. No immediate advantage;

5. No guaranteed job after; and

6. Intern knows they aren't getting paid.

In Santa Monica, the California Division of Labor Standards Enforcement ("DLSE"), which enforces the state's wage-and-hour laws, scrutinizes trainee arrangements to ensure that they are really valid work-for-education exchanges, and not just ways to get free labor.

A California employer who doesn't want to be flagged for wage/hour liability should be sure that unpaid internships strictly meets the six factors DOL test.

Wasn’t there a case about this recently?

There sure was . . .

You may have heard about the 46 year old intern who worked on the set of the Black Swan. He thought he (and other interns) should have been classified as employees and hence be paid. The case ultimately settled last summer before reaching the Supreme Court. You can read description of the case from the LA Times and Deadline.

So what is the bottom line?

If your company will be using a person’s services to save money, rather than training them, then that person should not be considered an unpaid intern. Instead, they should be considered employees and should be paid at least minimum wage.

Paid Intern - If you would like to pay an intern, then best practices are to pay at least minimum wage ($10.50 in LA County for businesses with less than 26 employees as of July 1, 2017) using a W-2.

Unpaid Intern - If you would like to use an unpaid intern then make sure you follow the 6 factor test discussed above as California DSLE applies a strict interpretation of the Department of Labor’s standards.

If you have any questions about whether or not you should be paying your interns you can connect with us directly here.

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This article was written by Curtis Roberts, an attorney at The Founder's Attorney.

If you have any questions or suggestions he can be reached at curtis@foundersattorney.com.

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This article is an advertisement, for general information, and entertainment purposes only and is not intended as a substitute for legal advice. The views of the author are their own and do not represent the views of The Founder's Attorney. The Founder's Attorney and the author, Curtis Roberts, Esq., assume no liability for the contents of this post. To learn more about our services, please contact our office.The information presented should not be construed to be formal legal or financial advice nor the formation of a lawyer/client relationship or any fiduciary duty.

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