California Law and Unpaid Interns: New Legislation in the Works - Shegerian Law

California Law and Unpaid Interns: New Legislation in the Works

A bill to ban sexual harassment in the workplace toward unpaid interns was proposed in California in January. The bill introduced by Assemblywoman Nancy Walker (D-Berkley), will, for the first time, protect unpaid interns from all other types of discrimination at work as well.

Special conditions surround the employment of paid and unpaid interns. Interns have traditionally been known to work for little or no pay in exchange for job experience and connections, but lawsuits challenging employers’ exploitation of the traditional unpaid intern rubric are on the rise.

Recent advances in federal and state law have improved the working conditions of interns, ensuring that employers do not take advantage of their free labor. In fact, the Department of Labor has issued statements indicating that hiring an unpaid intern for free labor is almost always a violation of the law.

Internship Standards under the Federal Department of Labor

Generally the Fair Labor Standards Act (FLSA) requires that no employee should work without compensation and that employees covered by the Act should at least receive minimum wages. The Department of Labor has outlined standards that an employer must meet in order to stay within the law when hiring interns.

These standards test the advantages granted to an employer against the value interns obtain from the internship experience to determine whether the employer is exempt from paying a minimum wage. The six-part test is as follows:

  1. The internship is similar to educational training.
  2. The internship benefits the intern.
  3. The internship does not displace regular workers
  4. The employer receives no immediate advantage from the work of the intern.
  5. There is no guarantee or entitlement to a job at the internship’s conclusion.
  6. Both the employer and the intern have a mutual understanding that wages will not be paid.

These criteria were introduced in a case called Walling v. Portland Terminal Co., 330 U.S. 148, (1947), where the Supreme Court held that even though the unpaid interns or “trainees” in the case were engaged in activities covered by the FLSA, the trainees were not “employees” as defined in the Act. Therefore, the Supreme Court reasoned that the defendant’s decision not to pay them did not violate the Act.

The Court also stated that FLSA is not so broad that it makes all workers employees, and as such, cannot include individuals who work, like unpaid interns, simply for their own benefit. Further, it reasoned that the plaintiff received “no immediate benefit” from the work done by the trainees. Thus, the Court held there can be no violation of FLSA when employers meet the above criteria for hiring unpaid interns.

Internship Standards under California Law

California has also derived an unpaid internship test, but with additional requirements. In fact, California adds five requirements to the six-part Department of Labor test:

  1. The internship is part of an educational curriculum.
  2. No employee benefits are received through the internship.
  3. The intern receives general, rather than specific job training.
  4. The screening criteria is similar to that which is required for admission to an educational program.
  5. Advertising for the internship clearly describes it as training-based or educational – not employment.

The California laws for unpaid interns highlight an emphasis on the educational nature of an internship, which may provide justification for the lack of compensation. The requirements advocate a partnership between the educational system, the intern and the employer and require a marked distinction between unpaid interns and employees.

To further insure that employers do not receive immediate benefits from the work of unpaid interns, the California laws require that only general career skills be passed on to interns – skills that could easily transfer to other forms of employment. Also, compared to federal legislation on the matter, there is a stronger emphasis on clear communication regarding the unpaid nature of the internship under California law.

Because hiring an unpaid intern can be risky, many California employers begin with the Department of Labor Standards. With a written request to hire an unpaid intern, the Department will issue an opinion about the legality of a particular internship program. This is a good way for employers to determine whether their unpaid internship violates the law before hiring. It’s an important safety measure for employers who desire to hire interns, but would rather forgo the risk of litigation.

How the Recent Legislation Factors In

The new legislation is specifically directed at interns and aims to protect them from sexual harassment and other forms of discrimination. The protection would work much like the protections enjoyed by employees under the Fair Employment and Housing Act (FEHA). The new law would fill a gap in civil protection for unpaid interns, who, because of their non-employee status, may experience sexual harassment and other forms of discrimination at work, often without a clear legal remedy in place.

Just recently, a New York federal district court ruled that unpaid interns could not bring lawsuits under the Human Rights Law of New York City, leaving many interns with no recourse for civil rights violations in the workplace. The California bill, however, would place an explicit ban on sexual harassment in the workplace for interns and would apply “general workplace civil rights provisions” to all unpaid interns.

New Protections On the Horizon

Laws for hiring interns can be tricky. Unpaid interns should be well aware of their protection according to present law and their growing protection under laws yet to be enacted. Especially in California, unpaid interns are increasingly gaining new protections similar to those enjoyed by compensated employees, filling a void in civil protections due to their status as interns rather than employees. As time goes forward, the new California bill protecting unpaid interns from discrimination at work will definitely be one to watch in 2014.

Manuela Varela

Relations Manager

Manuela Varela has been with Shegerian & Associates since August 2022. She is responsible for outreach and marketing on behalf of the firm and manages relationships between firms and referring attorneys. She is also responsible for developing business opportunities and affiliations. Manuela graduated from Loyola Marymount University with a degree in Economics and Political Science.