Can your company have an unpaid internship program? Are unpaid internships legal? Yes and Yes. Your company can most definitely develop an unpaid internship program. Unpaid internships can be of great value to college students or recent college graduates looking to explore and receive real world experiences. That being said there are federal and state laws governing the requirements of an unpaid internship program and companies must follow those guidelines to give the internship a genuine learning experience.
What is an intern?
Typically an intern is a student or recent college graduate, who is looking to gain real-world or hands-on experience in a particular industry or field. An intern can shadow current employees and can use company equipment or programs under the direct guidance of an employee. While an intern cannot be compensated for their time they can receive school credit for their time spent interning.
Laws Regarding California Unpaid Internships
The U.S. Department of Labor and the California Department of Labor Standards Enforcement have crafted laws setting forth the standards that a company must administer when having an unpaid internship program. These laws are often referred to as the six pack test:
- An intern cannot take the place of an employee
- The company must provide the intern with quality training
- The internship program is set up with the intern’s interest before the company’s
- The intern will be provided with real work experience including the use of company equipment and programs
- Both parties must understand that the intern will not be compensated during the internship program
- You may not promise the intern a job at the end of the internship program
Your company’s internship program must meet the criteria set forth above or your intern could be considered an employee and would be entitled to receive at least minimum wage, any overtime if worked, along with all other protections provided by federal and state employment laws. Failing to meet the U.S. Department of Labor and the California Department of Labor Standards Enforcement guidelines can also lead to costly lawsuits and even a potential class action should you have a large internship program.
California Paid Internship Laws
So what’s the difference between an unpaid internship program and a paid internship program? Basically, there are fewer laws surrounding paid internship programs as the intern in a paid internship program is essentially an employee. In a paid internship the intern can be considered a trainee and may make less than a typical person in that role or they may be part time but they are being compensated for their time pursuant to state and federal laws.
Some companies feel that unpaid internship programs hinder their business and therefore feel they are not feasible. While it is true that quite often internship programs interfere with the normal work flow, internships are a valuable asset in today’s society. Companies choosing to participate in this valued concept must adhere to the laws surrounding internships. Simply but, never think of your unpaid internship program as a free labor pool but a way for your company to help students gain knowledge in your field. And do your company a favor and contact Goldbach Law Group to review your internship program and provide you with the needed guidance and counsel so you will be in compliance with the various federal and state employment laws within California.