New Requirements for Unpaid Internship Programs

Internship programs can promote a business or industry to ambitious students looking for experience and items on their resumés.  However, a company must comply with several rules in order to exempt such interns from minimum wage laws.

An April, 2010 opinion letter from the California Division of Labor Standards Enforcement (DLSE) provides updated guidelines for qualifying intern programs.  The letter upheld the unpaid “trainee” initiative of Year Up, Inc., a non-profit organization placing disadvantaged young people in the IT industry for 6-month internships. The DLSE listed six factors:

1) The intern’s training actions with the company are similar to those a student would carry out in a vocational school;

2) The training is for the benefit of the trainee;

3) The trainee does not displace regular employees, but works under close observation;

4) The company derives no immediate advantage from the activities of the trainee and on occasion its operations may actually be impeded;

5) The trainee is not necessarily entitled to a job at the completion of the training period; and

6) The employer and the trainee understand that the trainee is not entitled to wages for the time spent in training.

The California DLSE states that if a company’s program does not meet all of these conditions for a given intern, that person should be considered an employee subject to both state and federal wage and hour laws.