Just Hire an Intern? Understanding the Risks Associated with Unpaid Internships

Aurthor: Annie Smiddy

Hiring an unpaid intern is a risky endeavor. The law presumes anyone who “suffers or permits” someone to work has employed that person. Employees are protected by the wage and hour laws, and failing to abide by these laws can expose a business to substantial liability. California’s Department of Labor Standards and Enforcement (the agency that regulates wage and hour laws) adopted the federal approach to applying an exemption to the wage and hour laws for “interns.” The DLSE uses a six-factor test, and ALL factors must be met for a person to be considered a true intern under California law:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment.

Comment: The DLSE commented that this element is satisfied when “an intern’s use of the employer’s computers, network systems, and tools to perform tasks” was “directly related to training and the educational and vocational objectives of the program.” Avoid assigning mundane or routine administrative tasks (such as running errands or making photocopies). Provide resources not necessarily available to the intern. Train, educate, supervise!

  1. The internship experience is for the benefit of the intern.

Comment: The internship should be “directly tied to the core components of the educations objectives” of the intern. Work with a university to provide school credit in exchange for the internship, and adhere to the university’s rules regarding school credit.

  1. The intern does not displace regular employees, but works under close supervision of existing staff.

Comment: Avoid clerical work, or work that is typically assigned to employees. Make sure that the intern is being closely supervised by employees, and not working on independent tasks.  However, some incidental work will not defeat the exemption “so long as such work does not unreasonably replace or impede the educational objectives for the intern and effectively displace regular workers.”

  1. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

Comment: Benefit to the intern is not sufficient to maintain the intern exemption; there must also be no immediate benefit to the company. Keep track of the time spent supervising and training the intern. Avoid assigning work that is necessary to the business that would typically be rendered by an employee. While “[t]he performance of the described tasks performed by interns at the placement sites has some benefit to the placement business,” the DLSE requires that “any such limited benefit is counter-balanced by impediments to the employer’s operations in both time and economic costs in teaching the intern the activities, reviewing any work performed as well as immediate economic costs to the business in participating in the program.”

  1. The intern is not necessarily entitled to a job at the conclusion of the internship; and

Comment: The internship cannot be an extended job interview. The exemption is not defeated by hiring the individual after the internship, but make sure to clearly state this in a written agreement between the parties prior to beginning the internship.

  1. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Comment: Again, written agreements are crucial!

Since the test is a multi-factored, factual analysis, there is inherent uncertainty in the ultimate determination of whether an intern is actually an employee. Under wage and hour laws, if the intern is misclassified, the company could be liable for damages and penalties, including, but not limited to, unpaid wages, liquidated damages for failing to pay minimum wage, unpaid overtime, pay statement penalties, premium pay for missed meal and rest periods, and waiting time penalties. To minimize exposure, consult with an attorney to ensure that your internship program meets the DLSE’s requirements, work with a university to provide school credit, provide a written agreement, and keep records of the project goals, training procedures, time you spend supervising and training, and time the intern spends performing the internship. Offer meal and rest periods, and understand that additional rules apply if hiring a minor.

Use the following link to see the DLSE’s opinion letter regarding the test of whether an intern is actually an employee: https://www.dir.ca.gov/dlse/opinions/2010-04-07.pdf

The Opening Day TRO


Author: Michael S. Dorsi

Extraordinary times call for extraordinary measures. And California civil procedure has an answer to the need for immediate orders from a court: you can, on one day, file your case, make your first motion, obtain a temporary restraining order, and have the court set a date when the defendant is ordered to show cause  why a Temporary Restraining Order should not be granted.

What is the trick to winning such a big, early victory for a client?

First, the relief must fit the facts. That the defendant owes a lot of money is typically not going to be enough for an early court order. A court can order the defendant to pay later. The Opening Day TRO requires something more than just monetary damages.

Second, you, the attorney, should get to know the courtroom. Different counties have different procedures. Marin County assigns cases to a single judge, so that same judge hears your ex parte application, your noticed motions, your case management issues, and your trial. San Francisco assigns several judges to civil trials full-time, while two different courtrooms handle motions (Department 501 for cases dealing with real property and housing, Department 302 for everything else). And while some judges take the bench, others send out a clerk to talk to the parties and report back with the papers. Having experience in the specific courtroom is best, but if you don’t have that, at least show up and watch ex parte applications in the appropriate courtroom.

Third, cross your t’s and dot your i’s. The easiest way for a court to deny an ex parte application is for failure to follow procedure. Sometimes that means delivering a courtesy copy of your papers even before you file them at the clerk’s office. Don’t worry if it seems strange, you will be more successful if you just do what the court wants.


Prop 22 Ruled Unconstitutional. Now What?

Written by:

Alex Guney

Last month, an Alameda Superior Court Judge ruled that Proposition 22 was unconstitutional and unenforceable.  While app-based drivers may have won this battle, their war to be classified as employees is far from over—especially as Uber, Lyft, and other gig service providers attempt to enact legislation similar to Prop 22 across the county.

Prop 22 was a successful ballot initiative that defined app-based drivers as independent contractors, and not employees, if certain conditions were met.  The ballot initiative was in direct response to Assembly Bill 5, which codified a presumption that a worker is an employee, unless the hiring entity could prove three circumstances were present (dubbed the ABC test).  The ABC test was developed by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court and threated the gig business model, which depended on the app-based drivers being classified as independent contractors.

Prop 22 provided a new framework for determining when an app-based driver may be classified as an independent contractor. Specifically, if the company (1) does not unilaterally set specific requirements for the dates and times of day, or minimum number of hours, the driver must work; (2) does not require the driver to accept specific service requests; and (3) does not restrict the driver from working for other companies (ride-share or otherwise), then the app-based driver may be classified as an independent contractor.  Bus. & Prof. Code § 7451.

In February of this year, a group of Uber and Lyft drivers, along with the Service Employees International Union, filed a petition for writ of mandate, asking a California court to rule that Prop 22 violates the State’s Constitution. Judge Frank Roesch of the Alameda Superior Court agreed with the drivers and ruled that Prop 22 is unconstitutional and unenforceable. First, the court ruled that Prop 22 imposed an unconstitutional limitation on the Legislature’s ability to exercise its plenary power to determine which workers must be covered by the workers’ compensation system.  Second, Prop 22 applied conditions to the Legislature’s ability to amend the new law, which the court also found unconstitutional.  Because the limitation on the Legislature’s ability to exercise control over the workers’ compensation system could not be severed from the remainder of the statute, “the entirety of Proposition 22 is unenforceable.”

In practical effect, the court’s order may be a victory for app-based drivers in name only.  It is very likely that the proponents of Prop 22 will appeal that court’s order, and in turn, request that the effects of the court’s order be stayed during the pendency of the appeal.  This means that Prop 22 will remain in effect while the case makes its way through the appeals process.  But the order ruling Prop 22 unconstitutional would not have resolved the issue of how to classify app-based drivers.  Even absent Prop 22, determination of whether app-based drivers are independent contractors would revert back to the ABC test.  On the journey to be classified as employees, the ETA for app-based drivers is TBD.

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