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Legal Considerations
An unpaid internship can be in violation of The Department of Labor Fair Labor Standards Act (Fact Sheet № 71). Employers and organizations intending to host interns should understand the laws surrounding internships.
DEPARTMENT OF LABOR REQUIREMENTS:
The U.S. Department of Labor has created guidelines for employers who utilize interns to determine whether an intern must be paid. These guidelines dictate how interns must be compensated. All interns must be paid, UNLESS ALL criteria outlined in The Department of Labor Fair Labor Standards Act is met.
THE TEST FOR UNPAID INTERNS AND STUDENTS
Courts have used the “primary beneficiary test” to determine whether an intern or student is, in fact, an employee under the FLSA.1 In short, this test allows courts to examine the “economic reality” of the internemployer relationship to determine which party is the “primary beneficiary” of the relationship. Courts have identified the following seven factors as part of the test: 1 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. 2 The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions. 3 The extent to which the internship is tied to the intern’s formal education program by integrated course work or the receipt of academic credit. 4 The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar. 5 The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning. 6 The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern. 7 The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
Note: If the seven criteria are not met, the student intern is entitled to at least minimum wage
If analysis of these circumstances reveals that an intern or student is actually an employee, then they are entitled to both minimum wage and overtime pay under the FLSA. On the other hand, if the analysis confirms that the intern or student is not an employee, then he or she is not entitled to either minimum wage or overtime pay under the FLSA.
WORKERS COMPENSATION
The Policy The CSU has put into place an excellent liability insurance policy (SAFECLIP) that covers all students doing general internships on- and off-campus, including activities students participate in as part of service-learning coursework. The policy provides professional and personal general liability coverage for students enrolled in service-learning and other internship course sections for which they are receiving academic credit. The policy provides indemnity—including legal defense costs—for students, faculty, campus and host institution (community agency) if there is a claim or lawsuit involving injury to others or damage to property in connection with service-learning and other academic fieldwork experiences.
The policy does not provide coverage for workers’ compensation or transportation (i.e., the travel of students to and from their fieldwork activities) and is not a health insurance policy.
Paying for Coverage The premium for the policy is paid by the University; students do no pay the premium. However, SAFECLIP only covers those student internships that are undertaken in conjunction with a for-credit, academic class. Independently arranged internships not associated with a for-credit class are not covered by SAFECLIP.
Certificates of Insurance An organization may require evidence that CSUCI interning students are insured for liability. Employers may request a certificate of insurance (which shows evidence of insurance) by calling our Risk Management team at (805) 437-8490 or by emailing your request to HRServices@csuci.edu Please submit the request at least one month prior to the date evidence of coverage is required.
California State University Channel Islands Human Resources–Lindero Hall One University Drive Camarillo, CA 93012
WHERE TO OBTAIN ADDITIONAL INFORMATION
This publication is for general information and is not a regulation. For additional information, visit our Wage and Hour Division Website: https://www.dol.gov/agencies/whd and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-4USWAGE (1-866-487-9243).
The Department of Labor Fair Labor Standards Act is available at
