The Legal Requirements for Using Unpaid Interns

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Last week, my business partner Ed brought his son Alex (whose school was on spring break) into our office for an afternoon of what Ed referred to as “slave labor” (i.e. assembling packages of marketing collateral).  We and Alex were both lucky that the engagement was only a half-day; Alex because he had better things do with his vacation, and Ed and me because we would have risked being in violation of California’s minimum wage laws!

If you’re considering hiring unpaid interns for your business, you’ll need to meet certain Federal and state requirements; otherwise, you’ll run afoul of the laws that require that you pay a minimum wage (which is currently $8.00 in California). Recently, the California Division of Labor Standards Enforcement (DLSE) issued an opinion letter (http://www NULL.dir NULL.ca NULL.gov/dlse/opinions/2010-04-07 NULL.pdf) stating that it follows the “six-factor trainee/intern exemption test” adopted by the U.S. Department of Labor.  The six factors are as follows:

  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 trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.

Bottom line, your internship program needs to have a bona fide educational purpose and educational content, and not just be a way to get free labor.  I sure hope Alex doesn’t read this post.

Thanks to Wilson Sonsini (http://www NULL.wsgr NULL.com/WSGR/Index NULL.aspx) for the good client Alert (http://www NULL.wsgr NULL.com/WSGR/Display NULL.aspx?SectionName=publications/PDFSearch/wsgralert_unpaid_internships NULL.htm) re: the DLSE opinion letter.

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  • Psychedelic Chicken

    I have zero sympathy for these businesses that are obviously wanting to entice people into investing hard work and their dreams for zip, zilch, nada.

    One look at the professional demands in this genre of ad posts, and then one look to the bottom of the ad that says "no compensation", is strongly indicative that this brand of "entrepreneur" or business owner needs to dig deeper into their own entrepreneur spirit to do the work themselves first on their own valuable time.

    That said, of course there are those who are legitimately offering internships. I'm happy to see however that these other businesses are getting some pressure to stop screwing around with other people's time and lives to make a cheap buck.

    And to the author and Ed…I don't think you have to worry about having a family member or friend helping put boxes together to help out, but you might want to toss the kid a few bucks just to be nice. Of course that amount of money would be a real setback to the "entrepreneur" that is demanding not only the box be assembled, but the graphics designed, the package design be top notch all with a go get 'um positive attitude of course, then its on to finding that marketing niche, the social networking savvy, the excellent communication skills with all team members, the willingness to arrive early and stay late of course, and the ability to keep that pipe dream alive that they aren't in reality just working their asses off for a cheap schmuck.

  • MagickWizard

    So many scammers are using "intern" in their ads on craigslist I just wonder where the officials are as this goes on so much. I think these employers know they are breaking the law, they just don't think anyone really is watching. And I don't think so either. 

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