California DLSE Modifies Its Standard For Legality of Unpaid Internships

Subsequent to our post of April 6, the California DLSE issued a lengthy new opinion letter regarding trainees, available here.In it, the Division upholds the uncompensated “intern” status of participants in the Year Up program, a program in which a not-for-profit places 18-24 year olds in underserved communities to develop marketable skills in the information technology arena for 6 month assignments.The Division applied the six factor conjunctive test utilized under federal law in reaching its conclusion:

1) The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;

2) The training is for the benefit of the trainee

3) The trainees do not displace regular employees, but work under close observation

4) The employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion his operations may actually be impeded

5) The trainees are not necessarily entitled to a job at the completion of the training period

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

See, e.g., Reich v. Parker Fire Protection Dist., 992 F.2d 1023, 1026 (10th Cir. 1993).

The opinion letter departs from the DLSE’s more expansive eleven-factor test, which included the additional factors below, observing that they “do not appear to be based upon any source statute or regulation from which they derive nor are the additional factors identified with specific case law.”

7) Any clinical training is part of an educational curriculum;

8) the trainees or students do not receive employee benefits;

9) the training is general, so as to qualify the trainees or students for work in any similar business, rather than designed specifically for a job with the employer offering the program, i.e. upon completion of the program, the trainees or students must not be fully trained to work specifically for only the employer offering the program;

10) the screening process for the program is not the same as for employment, and does not appear to be for that purpose, but involves only criteria relevant for admission to an independent educational program, and

11) advertisements for the program are couched clearly in terms of education or training, rather than employment, although the employer may indicate that qualified graduates will be considered for employment.

While the DLSE’s willingness to abandon these supplemental factors is an encouraging sign, the difficulty of satisfying the original six-factor test remains.Few internship programs, whether offered through the not-for-profit sector or otherwise, are as fully compliant with the prevailing federal test as that offered by Year Up.