Your company is approached by a new graduate from college who is looking for work experience. He or she asks to become an unpaid intern for six months, working alongside other employees. If your company permits the internship, can the intern later pursue a claim on the grounds he or she was really an employee entitled to minimum wage, meal and rest periods, and overtime?
Given the current job market, the above scenario is becoming more common. The distinction between an intern and employee is not clear cut, however, and employers can face the threat of litigation if they don’t take steps to limit the scope of an unpaid intern’s duties and responsibilities.
A recent opinion letter from the California Labor Commissioner’s office provides some guidance for employers looking to minimize potential exposure from using unpaid interns. The letter clarifies the test to be used for determining whether a trainee or intern is legitimately not an employee. In the past, California has deviated from the six factor test used by the federal Department of Labor, which has made it harder for employers to establish that unpaid interns are not employees. The letter indicates that California will now apply the less rigorous federal test, which allows unpaid internships where:
• The training received by the interns is similar to that received at a vocational school
• The training is for the benefit of the interns
• The interns do not displace regular employees, but rather work under their close supervision
• The company derives no immediate advantage from the activities of the interns, and on occasion the company’s operations may be disadvantaged by utilizing the interns
• The interns are not necessarily entitled to a job at the end of the internship
• The company and interns understand they will not be paid for the internship
While adoption of the federal test lessens the risk, California employers should still take the following preventative steps when utilizing unpaid trainees or interns:
• While educational credit for the internship is not a prerequisite, it is very helpful in establishing the first and second factors above. Companies should ask prospective interns if they will be receiving credit, and require interns to supply adequate documentation to establish the credit earned. Interns should be asked to explore obtaining educational credit for the internship if they have not already done so.
• In order to meet the third factor, interns should not regularly perform the same work as employees, unless they are doing so to get “hands on” training under direct supervision by an employee. The opinion letter makes clear that interns are not forbidden from ever performing the same work as employees, however. Interns may occasionally perform clerical tasks such as filing or typing, but only if such tasks are incidental to their training.
• Interns should be directly supervised by another employee or manager. If interns receive only general supervision and instruction but spend most of their time working on their own, it is likely the intern will be deemed a replacement for other employees and the company will be considered to have received an immediate benefit.
• A written intern policy or internship offer letter is critical to establish the parameters of the internship. Have the intern sign a document stating they understand they are not an employee, they are not necessarily guaranteed employment at the end of the internship, and they will not be paid for the internship.