The distinction between an internship and employee / employer relationship has been subject to much debate and litigation all over the country during the past few years. However, in California the existing law states that a worker can be classified as an intern (and not be paid) only if all of the following six requirements are satisfied:
Factor 1: Training similar to that provided at a vocational school.
Training should be closely tied to the intern’s educational goals. This factor is more easily met if the employer’s office or facilities provide resources not necessarily available to the intern outside of an industrial or professional setting. For instance, in once case the interns – trainees learned how to operate trains in the rail yard. The DSLE’s Opinion Letter found this factor to be satisfied when “an intern’s use of the employer’s computers, network systems, and tools to perform tasks” was “directly related to training and the educational and vocational objectives of the program.”
It is easy to see how employers fail to comply with this factor when they have interns performing tasks like photocopying and running miscellaneous errands that don’t really add much or anything to those interns’ educational objectives.
Factors 2 and 4. The training is for the benefit of the intern, and the employer derives no immediate advantage from the intern’s activities.
The interns must benefit from the training being offered. In the above mentioned case, the trainees became qualified to become railroad brakemen. In more recent cases, courts have required that the benefit be closely tied to the intern’s education. The DLSE found this factor met when “the internship training activities and additional other services provided by the program during the internship appeared to be directly tied to the core components of the educational objectives” of the interns. The argument is even more convincing if the intern receives school credit for time spent in the internship.
Even so, it is not enough that the intern “benefit” from the training. In addition, the company must also show that it received no immediate advantage from the intern’s work. When an intern performs necessary work that an employer would otherwise have to pay an employee to perform, the employer necessarily receives an immediate benefit from the intern’s services. Thus, while it is acceptable that “the performance of the described tasks performed by interns at the placement sites has some benefit to the placement business,” it is necessary that “any such limited benefit is counter-balanced by impediments to the employer’s operations in both time and economic costs in teaching the intern the activities, reviewing any work performed as well as immediate economic costs to the business in participating in the program.” In other words, if the benefit to the employer from the intern’s activities is not “neutralized” by the burden of training the intern at the same time, this factor will not be satisfied.
Factor 3: The interns do not displace regular employees, but work under the employees’ close supervision
The DLSE has clarified that this factor is not a “but-for” requirement. Thus,“if the educational goals or objectives of an internship program include exposure to real world working environments, occasional or incidental other work by the intern should not defeat the exemption so long as such work does not unreasonably replace or impede the educational objectives for the intern and effectively displace regular workers.”
This interpretation would not allow an employer to routinely use unpaid interns for clerical or administrative work. The actual role of the trainee must be one which necessarily requires close supervision rather than performing substantial independent work which can be performed by regular workers.” An internship program where the interns perform work on their own with little or no supervision will likely violate this requirement.
Factors 5 and 6: The Intern Is Not Entitled To A Job, and the Parties Understand That The Intern is Not Entitled To Wages
Factors five and six are relatively straightforward and easy to meet. Both can and should be clarified in a written agreement between the intern, the employer, and the educational institution. Of particular note is the observation that it is inappropriate to use an unpaid internship “as a trial period for individuals seeking employment at the conclusion of the internship period.” The fact that some interns may later be hired does not necessarily defeat the arrangement as long as the agreement between the parties is clear that the intern is not automatically entitled to a job upon completion of the program—and the practice is clear that not all interns are hired. Finally, while the understanding between the employer and the intern that there will be no payment of wages is not dispositive with respect to intern status, it is nevertheless evidence that the person understood the nature of the relationship when it was entered into.
For more detailed information on the distinction between an intern and an employee, please see dlse-opinion-letter-internship