Are Interns Employees? DLSE Provides Test
In an April 7, 2010 opinion letter (DLSE OL 2010.04.07), the California Department of Labor Standards Enforcement ("DLSE") clarified its test for determining when training/internship programs do not create an employer-employee relationship and thus are not subject to California's minimum wage law. In its letter, the DLSE considered the training and internship program of a non-profit entity which was aimed at providing urban young adults with education, experience, and support in developing fundamental job skills and technical skills in information technology for use in the workplace. There were two components to the program: the first involved five months in earning up to 14 college credits in approved courses at a community college; the second concerned working as an intern for a private business for six months.
With a lack of clear California authority on the point, the DLSE looked to analogous federal law under the Federal Fair Labor Standards Act for guidance. In so doing, the DLSE set forth six criteria which should be applied in assessing the trainees' exemption from California's minimum wage for the work they performed during the internship phase of the program:
1. The training, even though it includes actual operation of the employer's facilities, is similar to that which would be given in a vocational school;
2. The training is for the benefit of the trainees or students;
3. The trainees or students do not displace regular employees, but work under their close supervision;
4. The employer derives no immediate advantage from the activities of trainees or students, and on occasion the employer's operations may be actually impeded;
5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and
6. The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training. However, the trainees still may receive stipends so long as the amount does not exceed the reasonable approximation of the expenses incurred by interns involved in the program.
If your company is participating in a training/internship program or is contemplating initiating such a program, this opinion letter is a must read for details on assuring that interns are exempt under California's minimum wage law.
Steve Wiman is a Partner in Nossaman's Los Angeles office and former Chair of Nossaman's Litigation Department. His complex litigation practice focuses on breaches of contract, state and federal antitrust, state and federal securities, unfair business practices, judicial review of administrative decisions, land use, and real property. He can be reached at 213.612.7818 or firstname.lastname@example.org.