(Source: HR California presented by CalChamber, by Mike McCluskey, CalChamber Senior Technical Editor – March 23, 2023)
During the spring and early summer months, many employers add to their staff by bringing on students who are on break from their studies. This can provide great opportunities for both the employer and students – but employers should be aware of the many requirements they must meet. Requirements differ depending on whether they’re bringing on unpaid interns or hiring minors (individuals under the age of 18).
The Ins and Outs of Internships
Internships can be a win-win for employers and learners alike. Students can gain valuable knowledge in their chosen profession, and employers can invest in the student’s future success, while simultaneously providing mentoring opportunities for current employees. Students can be an enthusiastic addition to your workplace and providing them with real-world experience can be rewarding. Employers may even spot their next great talent to bring aboard when the student graduates. As an added bonus, the former intern will likely more easily assimilate.
Can Employers Use Unpaid Internships? The answer is… that it’s complicated.
For starters, employers should never try to fill a position with an unpaid intern simply because it’s cost effective. Some employers have used interns as a source of “free” labor, and the law doesn’t look kindly upon such practices. Interns who do the same work as regular employees, without pay or benefits, have successfully sued employers for unpaid wages and other violations.
Both state and federal law emphasize that for an intern to be unpaid, the student must gain the most benefit from the arrangement. Both the U.S. Department of Labor and the California Division of Labor Standards Enforcement use the “primary beneficiary” test to determine this. In determining whether an individual is an intern or an employee, courts have identified seven factors, which include the extent to which:
- The intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee – and vice versa.
- The internship provides training similar to that given in an educational environment, including clinical and other hands-on training provided by educational institutions.
- The internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
- The internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
- The internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
- The intern’s work complements, rather than displaces, the work of paid employees, while providing significant educational benefits to the intern.
- The intern and the employer understand that the internship is conducted without entitlement to a paid job at the internship’s conclusion.
No single factor is determinative, and the question of whether an intern is actually an employee for purposes of receiving state and federal wage and hour protections, will depend on the unique circumstances of each case.
Even if an individual is correctly classified as an unpaid intern, California’s Fair Employment and Housing Act (FEHA) provides the intern protections against harassment and discrimination, and it extends protections and accommodation requirements around religion.
Given the fact-specific analysis that is involved in applying the “primary beneficiary” test, it is highly recommended that employers who are considering bringing on “unpaid” interns consult with legal counsel before doing so.
Some employers might not be looking for unpaid interns, but may still wish to bring aboard student workers. They can do this by directly hiring them, and following California’s various wage and hour laws. This includes paying at least the minimum wage, paying overtime when required, and ensuring compliant meal and rest breaks – to name just a few.
When hiring minors under the age of 18, however, some additional requirements and limitations exist. Employers must ensure that:
- They have a valid Form B1-1 (Statement of Intent to Employ a Minor and Request for a Work Permit) for the current school year and it is on file with the school district
- The school district has issued a work permit, Form B1-4 (Permit to Employ and Work) for the current school year and the employer has it on file in the workplace
- The minor’s work schedule complies with the legal number of hours allowed
Employers also should keep in mind that state and federal laws place significant restrictions on employing minors:
- Those who are under the age of 14 (with very limited exceptions)
- Those who are working in hazardous occupations (explained in the Department of Industrial Relation’s Child Labor Laws Summary Chart)
- Those who are driving on public highways and streets
- Those who are in the entertainment industry
There are also limits on working hours for minors. A minor cannot work more than eight hours in a day, with limited exceptions, including minors working at professional baseball games and in specific agricultural packing plants. An employer can be charged with a misdemeanor if they fail to abide by this law.
Employers with five or more employees that hire minors also have mandated reporter training requirements. Under the law, two categories of employees within such organizations are labeled “mandated reporters,” which are defined as individuals who must make formal reports of suspected child abuse and neglect to law enforcement authorities. These two categories of employees are:
- “Human resource employees,” defined as any employee designated by the employer to accept any complaints of misconduct (i.e., discrimination, harassment, retaliation, etc.) made under the FEHA
- A person whose duties require direct contact with, and supervision of, minors’ duties in the workplace
Covered supervisors’ reporting obligations are limited to instances of sexual abuse. However, HR employees are not subject to this limitation and must report all types of child abuse and neglect.
Covered employers must provide these employees with training in both identifying and reporting child abuse and neglect. The training requirement may be met by completing the Child Abuse Mandated Reporter Training offered by California Department of Social Services’ Office of Child Abuse Prevention.
Bringing on interns and hiring minors can be a win-win for employers and learners alike – but there are key things to remember if you choose to bring them on board:
- When considering bringing an unpaid intern on board, start by using the “primary beneficiary” test to determine whether the individual would truly be an intern or should be an employee. Consider consulting legal counsel to help with the analysis.
- Interns have the same protections against harassment and discrimination as regular employees.
- When hiring minors, ensure that they have a valid work permit and that the hours worked account for the minor’s school schedule.
- Know and abide by restrictions for the type of work minors can perform.