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Are Unpaid Internships Legal in California? The Low Down on Internships

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Many California college students and recent graduates are offered unpaid internships so they can “learn about” a particular industry. By some accounts, there are over 1.5 million unpaid interns working in the United States. But is it really legal to ask someone to work for no pay? The answer is maybe – under certain circumstances.

The U.S. Department of Labor’s Seven Tests

In January 2018, the U.S. Department of Labor released a revised set of guidelines designed to help distinguish “employees”–workers who must be paid at least the minimum wage under the Fair Labor Standards Act (FLSA)–from “interns,” who do not have to be paid under certain circumstances. The Department’s actions came in response to a series of federal court decisions that found the government’s previous guidelines too inflexible. The new guidelines largely reflect what the Courts have found are more appropriate tests for properly classifying workers.

The new guidelines provide seven factors are used to help identify the “primary beneficiary” of a purported internship, i.e. the employer or the worker. The factors are as follows:

  1. Does the worker clearly understand from the outset that there is no expectation of compensation?
  2. Does the worker receive training that is similar to what would normally be provided in a traditional “educational environment”?
  3. Is the proposed internship tied to the student’s educational program? For example, does the worker receive formal course credit from his or her school?
  4. Do the terms of the internship conform to and accommodate the worker’s normal academic calendar and school commitments?
  5. Is the duration of the proposed internship limited to the period in which the worker receives “beneficial learning”?
  6. Does the proposed intern’s work complement or displace work typically performed by regular employees?
  7. Does the worker understand that there is no “entitlement to a paid job” once the proposed internship ends?

The rules provide that no one element controls, and it is not necessary for an intern to meet all seven elements to properly qualify as an unpaid intern. In practice, courts look at each situation on a case-by-case basis. If you have any questions or concerns about whether your unpaid internship qualifies under the rules, it is recommended to speak with an experienced California employment law attorney.

Resources:

latimes.com/business/la-fi-unpaid-internships-20180112-story.html

dol.gov/whd/regs/compliance/whdfs71.htm

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