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By Roy Schneider, Esq.

Interns can help to instill a mentorship culture at your company and inject new ideas into the organization. However, the intern- employer relationship can be a tricky one, and should be carefully considered.

Unpaid Interns

The most common question that is raised when an employer is considering bringing an intern on board is whether or not that intern will need to be paid.  Although common, the practice of hiring unpaid interns may actually violate California and federal labor laws unless the internship is part of a school curriculum program or more akin to a training program than actual employment. The Department of Labor has developed the following 6-part test, in which all 6 criteria must be met, to determine whether an intern can be unpaid.

  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 interns;
  3. The interns do not displace regular employees, but work under their close observation;
  4. The employer derives no immediate advantage from the activities of the interns and on occasion the employee’s operations may be actually impeded;
  5. The interns are not necessarily entitled to a job at the conclusion of the internship and;
  6. The interns and the employer understand that the interns are not entitled to wage for the time spent in training.

In addition, the DOL has increased audits of companies in an effort to ensure that no workers are mistreated because of misclassification. If your company has improperly classified an intern as an “unpaid intern” and you’re audited by the DOL or a state agency you could face hefty fines and be responsible for unpaid wages plus interest, penalties and related taxes.

If your company has hired unpaid interns in the past, or currently employs them, or is considering hiring them, you should consult an experienced employment law attorney at Schneiders & Associates, L.L.P. to determine how best to legally protect your company.

Interns as Independent Contractors

It is rare that an intern should be classified as an Independent Contractor. The main problem with classifying interns as independent contractors is that most working relationships with interns look nothing like independent contractor relationships.

Independent contractors are typically their own legal entity, provide their own tools, set their own hours, and have multiple clients and their own work premises. Interns, on the other hand, have rarely formed an LLC or corporation, generally are not working for multiple employers and are most likely working only on your company’s premises.

Interns as Part-time Employees

The experienced employment law attorneys at Schneiders & Associates, L.L.P. recommend, in most cases, that employers hire their interns on a part-time basis. Your part-time employee policy should be written clearly in your employee handbook, and your intern offer letter should indicate what benefits part-time employees are and are not eligible for.

Best Practices When Hiring Interns

Even though the intern will be paid at least minimum wage as an employee, make it apparent that the internship program is about learning. Include this in the offer letter to interns and in any documentation that you give them throughout their internships, including employee handbooks.

Give interns meaningful tasks, but have learning or mentoring sessions associated with each task. Give them direct supervisors and have those supervisors meet with the interns regularly.

If you have additional questions regarding hiring and working with interns, structuring an internship program, or any other intern-employer relationship questions, contact an employment law attorney at Schneiders & Associates, LLP.

About the Author
Theodore J. Schneider practices in the areas of business and corporate transactions, employment law counseling, municipal and public law, real estate and land use, and homeowner associations. Ted began his legal career in 2002 when he joined the Los Angeles office of Gibson, Dunn & Crutcher, L.L.P. before relocating to Ventura County to join his father in practice.