Whether a person is correctly classified as an intern or he / she should be classified as an employee has significant consequences for both employees and employers. After all, employers do not have to compensate interns but they do have to pay lawful wages to employees. California (and Federal) courts rely on the “primary beneficiary” test to distinguish employees from interns / students. This test involves seven factors:
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 coursework 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.
No single factor alone determine whether someone is an employee or a contractor. All the factors are to be considered in totality to make a correct determination. It’s important to remember that similarly to the employee / contractor test, referring to someone as an intern doesn’t mean that they are correctly classified as interns. What matters is the information elicited through the above test.