Wage and Hour: Are Internships exempt from minimum wage and overtime laws?

Summer is on its way and soon thousands of students will be looking for a summer job. Some will seek internships with hopes of continuing their education, building a resume and getting work experience to improving their prospects of getting a job after graduation. In addition, as part of some course requirements or before receiving accreditation or obtaining a license, some graduate programs, careers or professions require on the job training and direct work experience. Among other things, this ensures a constant flow of indentured servants and the need for internships.

Some internships are paid, while others are not.

For unpaid internships to fall outside California and federal minimum wage and overtime requirements, they must satisfy a six part criteria, as follows:

  1. The training, even though it includes actual operation of the employer’s facilities, is similar to that which would be given in a vocational school;
  2. The training is for the benefit of the students;
  3. The students do not displace regular employees, but work under their close observation;
  4. The employer derives no immediate advantage from the activities of the students, and on occasion the employer’s operations may be actually impeded;
  5. The students are not necessarily entitled to a job at the conclusion of the training period; and
  6. The employer and the students understand that the students are not entitled to wages for the time spent in training.

The six part criteria is applied in view of “all the circumstances” surrounding the intern’s activities to determine whether an intern is an employee or exempt from minimum wage and overtime laws.

While all employers have a need to keep costs low and free help would certainly go a long way to obtain that goal, the fact is that for an employer, true internships are a pain in the butt. An intern needs training, supervision, and constant review with constructive feedback. This requirement typically hinders the work and takes resources away from the task at hand.  In other words, it’s unprofitable. While it is appropriate for an intern to do routine tasks of operating a business, like answer the telephone, a substantial part of internships is the hands on training by another employee-professional. Internships must provide practical experience and meet the educational requirements of the particular vocation that the intern intends to pursue.