In the sunny state of California, it’s perfectly legal to have an intern work without pay. That said, this practice is tightly regulated by both federal and state laws, and employers must carefully adhere to these rules to ensure that their internship programs are above board. Keep reading to learn more and contact PLBH at (800) 435-7542 if you need to speak to an employment attorney.
Federal Guidelines and the “Primary Beneficiary Test”
At the federal level, the nature of the relationship between the intern and the employer is scrutinized. The key is identifying the primary beneficiary of the internship. According to the “primary beneficiary test,” this relationship needs to primarily benefit the:
- intern, rather than the
- employer.
Should the scale tip in favor of the employer, the intern may be improperly classified and, by law, should be considered an employee.
The U.S. Department of Labor outlines seven criteria to evaluate who benefits most from the arrangement:
- The mutual understanding that no compensation is expected.
- The level and nature of the training and its resemblance to an educational setting.
- The connection between the internship and the intern’s formal education program, including the provision of academic credit.
- The accommodation of the intern’s academic commitments by corresponding to the academic calendar.
- The limitation of the internship duration to the period beneficial for learning.
- The extent to which the intern’s work supports, rather than replaces, paid employees while providing significant educational benefits.
- The clear understanding between the intern and the employer that no wage is promised after the internship’s completion.
No single factor dictates the outcome, as the overall experience is considered based on the individual circumstances of the intern’s role.
Deciphering Internship Status in California
California imposes its own layer of regulations on top of the federal requirements. Employers must present a comprehensive proposal to the Division of Labor Standards Enforcement (DLSE) to secure approval for an unpaid internship program. The application’s success hinges on demonstrating that:
- The internship is an extension of the intern’s academic experience.
- No employee benefits, such as health insurance or workers’ compensation, will be provided.
- The internship offers training or valuable industry-specific work experience.
- The employer clearly communicates the unpaid nature of the internship.
Only with DLSE’s green light can the internship proceed without financial compensation. Otherwise, those in intern roles must be compensated as regular employees.
Rights and Recourse for Unpaid Interns
Unpaid interns in California who find themselves in a role more akin to that of an employee have the option to challenge their classification. A successful misclassification claim could lead to recovery of wages sufficient to at least meet the minimum wage, other lost benefits, and possibly include attorneys’ fees and accrued interest on the unpaid wages.
Typically, interns would then be categorized as nonexempt employees, which opens the door to additional compensation for overtime and for any missed meal or rest periods. Both full-time and part-time interns could receive significant back pay if such a claim is warranted and successful.
The Decision to Challenge Unpaid Internship Conditions
Despite the legal avenues available, many interns may hesitate to pursue a claim due to potential reputational consequences. Initiating legal action can sour relations with the host company and could jeopardize future employment prospects, especially if the employer withholds a positive recommendation as a result. Some companies might exploit this reluctance, leveraging the opportunity to benefit from unpaid labor.
For interns considering such a step, it is crucial to consult with an employment law specialist who understands the nuances of California’s labor laws. Should you find yourself in this position, reaching out to PLBH for advice is a wise move. Connect with by calling (800) 435-7542 for guidance tailored to your unique situation.