VB CLIENT ADVISORY - UNPAID INTERNSHIPS
UNPAID INTERNSHIPS LAW
Varner & Brandt Law Update
Although unpaid internships appear to offer the appealing prospect of free labor while simultaneously offering a valuable training opportunity to students seeking experience, both California and federal law closely regulate the limited circumstances under which individuals may work without monetary compensation.
The California Division of Labor Standards Enforcement (“DLSE”) recently affirmed in an opinion letter that California relies on the six criteria established by the federal Department of Labor (“DOL”) to determine if companies are able provide unpaid internships which are exempt from minimum wage and overtime requirements. The six criteria established by the DOL under the Fair Labor Standards Act are:
- the training is similar to vocational school,
- the training is for the benefit of the trainee,
- the trainee is not replacing a normal employee and works under supervision,
- the sponsor of the trainee does not derive any immediate benefit from the trainee,
- the trainee is not entitled to a job after completion of training, and
- the sponsor and the trainee understand that the trainee is not entitled to wages (although a stipend may be permitted).
These six criteria are relatively inflexible and generally make it less appealing for a for-profit company to attempt to provide unpaid internships. Many companies are electing to forego unpaid internships altogether, preferring instead to pay wages that range from minimum wage for undergraduate students to as much as $25 per hour for graduate students. Notwithstanding some of the challenges associated with their implementation, unpaid internships can be a valuable tool for giving back to the community and compliance with the six criteria is possible with advance analysis and planning.
Varner & Brandt LLP is qualified and available to assist in the evaluation of a company’s unique situation to structure unpaid internships while also remaining compliant with the stringent state and federal regulations.
