Employers Group Blog Connection

Interns: Everything an employer needs to know - (PART 2 of 2)

Posted by Nicole Vierzba on Fri, Aug 26, 2011

(Continued from yesterday's article...)

Payment for interns
One of the most common questions asked by employers developing internship programs is whether the employer must pay an intern for his/her work.  The interns may be compensated with an hourly rate or a stipend to cover meals, living expense, travel etc. 

The California state minimum wage is $8.00; interns being paid on an hourly basis cannot be paid below this wage.  A stipend is a one time payment that does not correspond to an hourly rate. 

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In many cases, the employer pays a stipend to students for their meals and lodging or to assist with tuition.  This is not considered payment of wages for the purpose of determining whether a student is an employee.  So, to decide whether or not to pay an intern is determined by an analysis of the on-the-job experience the individual will have in relationship to the standards set forth under the Fair Labor Standards Act, which requires employers to pay at least the minimum wage to employees.

Pursuant to this law, the U.S. Department of Labor (DOL) has developed six criteria for identifying a learner/trainee who may be unpaid.  The criteria are:

1. The training – even though it includes actual operation of the employer’s facilities – is similar to training that would be given in a vocational school.
2. The training is for the benefit of the student.
3. The student does not displace regular employees, but works under the close observation of a regular employee.
4. The employer provides the training and derives no immediate advantage from the activities of the student.  Occasionally, the operations may actually be impeded by the training.
5. The student is not necessarily entitled to a job at the conclusion of the training period.
6. The employer and the student understand that the student is not entitled to wages for the time spent in training.

Because we are California, we have six additional criteria for the internship to be considered unpaid and they are:

1. The clinical training should be a part of an educational curriculum.
2. The students should not receive employee benefits.
3. The training should be general as to qualify the students for work in any similar business, rather than designed specifically for a job with the employer offering the program.
4. Upon completion of the program, the students should not be fully trained to work specifically for the employer offering the program, but should require more specific training for such employment.
5. The screening process for the program should not be the same as employment, and should not appear to be for that purpose.
6. Any advertisements should be specific for continual education, rather than employment, although the employer may indicate that qualified graduates will be considered for employment.

Interns are not volunteers
Can the unpaid intern be considered a volunteer for the employer?  DOL regulations define “volunteer” as an individual who provides services to a public agency for civic, charitable, or humanitarian reasons without promise or expectation of compensation for services rendered.  Most business internships would not fit within the definition of volunteer.


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