As employers we are often excited for the summer months when students are looking for internships to fulfill some academic requirement. We’re thinking, “Great! Free labor!” But, is it really? Your interns must meet the definition of a “trainee” otherwise they will be deemed an employee and entitled to minimum wage for all work performed.

Although there is no state statute or regulation that expressly exempts interns from the minimum wage requirements, California’s Division of Labor Standards Enforcement (DLSE) issued an opinion letter dated April 7, 2010 explaining the department’s opinions and practices on the subject matter.

In defining a “trainee” (as opposed to an “employee”), the DLSE deferred to the federal Department of Labor’s criteria, which is derived from the US Supreme Court’s Portland Terminal case.[1] The six criteria are:

  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 observation;
  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.
  7.  Use these criteria when designing an internship program for your business so that you satisfy the applicable legal requirements. Perhaps the most important thing to keep in mind is that the internship is supposed to be designed to benefit the trainee, not the employer.

If you have any questions, don’t hesitate to contact us today.

 

[1] Walling v. Portland Terminal Co, 330 U.S. 148 (1947)

Photo Credit: interns.org