Cal DLSE Eases Standard for Exempting “Interns” From Wage Protections

January 13, 2011 by Beeson Tayer & Bodine

The California Division of Labor Standards and Enforcement (DLSE) has issued a new opinion letter defining when interns are exempt from the wage protections of the California Labor Code.

Before the issuance of this new opinion, the DLSE required a higher showing than the federal government and considered an “intern” an employee unless each of eleven criteria were met. This eleven-part test included the six factors considered by the federal Department of Labor in determining whether an intern is an employee under federal law, plus an additional five factors.

In April 2010, the DLSE issued an opinion letter rejecting the eleven-prong test and aligning the California test with six-part test administered by the DOL. Under the DLSE/DOL test, an intern will be exempt if:

(1) The training is similar to that which would be given in a vocational school;

(2) The training is for the benefit of the interns;

(3) The interns do not displace regular employees, but work under their close observation;

(4) The employer derives no immediate advantage from the activities of interns, and on occasion the employer’s operations may be actually impeded;

(5) The interns are not necessarily entitled to a job at the conclusion of the training period; and

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

Under the new standard it is now possible to be classified as an intern even when not currently enrolled in an educational program.

The DLSE previously interpreted the non-displacement test to require the intern to be treated as an employee if “but for” the intern, the employer would have paid an employee to perform tasks done by the intern. The DLSE has eased this test, stating that “occasional or incidental work” by the intern that would otherwise be performed by paid employees does not defeat the exemption.

Finally, contrary to DLSE past practice, but consistent with some federal court decisions, the new opinion letter leaves open the possibility of finding an intern exempt even if one or more of the six factors are not satisfied.

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