Internships are a great way for students to gain valuable experience in their chosen field. However, when it comes to legal matters, there is often confusion about the distinction between interns and employees. In California, the law is clear: unpaid interns are not considered employees and therefore cannot be eligible for workers’ compensation benefits. Continue reading to learn more.
What Constitutes an Intern?
The criteria for determining whether or not someone is an intern or employee can vary from state to state. In California, the Department of Industrial Relations (DIR) has established six criteria that must be met in order for a person to be classified as an intern:
- The internship must be similar to training given in a vocational school
- The internship must benefit the intern
- The employer should derive no immediate advantage from the activities of the intern
- The intern should not displace regular employees
- The employer should not expect any form of compensation from the intern
- Both parties should understand that there is no expectation of employment after the internship period
Workers’ Comp and Internships: Does Being Paid Make a Difference?
Most of the confusion around workers’ comp and internships comes down to one question: is the intern paid? If an internship includes wages, the intern is almost always treated as a regular employee for workers’ compensation purposes, regardless of job title. That means a paid intern who is injured on the job can generally file a workers’ compensation claim just like any other employee, and may be entitled to medical treatment, temporary disability payments, and lost wages while recovering. Employers cannot avoid these obligations simply by calling the position an “internship” — what matters is whether compensation was paid and whether the intern was performing regular job duties.
Criteria Set by Government for Taking Workers’ Compensation for Interns
According to California labor laws, unpaid interns are not eligible for workers’ compensation benefits because they are not considered employees under state law. This means that if an unpaid intern were injured while performing work-related duties, they would have no recourse through workers’ compensation insurance and would have to seek other forms of financial assistance such as disability insurance or personal injury settlements, if applicable.
Are Unpaid Interns Covered by Workers’ Compensation?
Are unpaid interns covered by workers’ compensation? In California, the general rule is no — if an internship genuinely meets all six DIR criteria described above, the intern is not classified as an employee, and an on-the-job injury would not be eligible for a workers’ compensation claim. In that situation, an injured unpaid intern would need to look at other avenues, such as personal injury claims against a negligent third party, health insurance, or disability benefits.
That answer changes, however, if the internship does not actually function the way it is labeled. If an employer controls the intern’s schedule and daily tasks the way it would a regular employee, provides a stipend or other compensation, or gains an immediate business benefit from the intern’s work rather than the intern primarily benefiting from training, the intern may be reclassified as a common-law employee. Once that reclassification happens, the same intern who was told they were “unpaid and uncovered” can become eligible for workers’ compensation benefits after all. This is also where the line between an intern and a volunteer matters: courts are generally far more willing to find that a working intern was functioning as an employee than they are with a true volunteer.
Risks Associated with Misclassifying Interns as Employees
Employers who misclassify interns as employees may face serious legal repercussions including fines, penalties, and even criminal charges depending on the severity of the violation(s). Additionally, employers could also be held liable for any injuries sustained by their interns if they are found guilty of misclassification due to negligence or intentional misconduct on their part. Therefore, employers must take all necessary steps to ensure that their interns meet all criteria set forth by DIR before allowing them to perform any work-related tasks on their behalf.
How Businesses Can Protect Both Themselves and Interns from Potential Legal Disputes
To protect both themselves and their interns from potential legal disputes regarding worker classification status, businesses should make sure that all interns meet all criteria set forth by DIR before allowing them to perform any work-related tasks on their behalf.
Additionally, businesses should also keep detailed records documenting each step taken during the hiring process including job descriptions, interview notes, background checks (if applicable), etc., so that they can prove compliance with labor laws if ever called into question by authorities or challenged in court by former interns seeking damages due to misclassification or other violations related to worker classification status.
Finally, businesses should also consider providing additional safety training and resources such as first aid kits/supplies and safety equipment (e.g., hard hats) appropriate for each task assigned so that they can demonstrate reasonable care was taken to protect their interns from potential harm while performing work-related duties on behalf of the business entity itself or its clients/customers/etc.
Examples Of Past Legal Cases That Highlight The Importance Of Correctly Identifying Interns
In 2016 a federal judge ruled against Fox Searchlight Pictures Inc., finding them guilty of violating minimum wage laws after misclassifying two production assistants as unpaid interns instead of employees during the filming of “Black Swan” back in 2009-2010.
In another case involving unpaid internships at Hearst Corporation back in 2014, a federal judge ruled against Hearst Corporation after finding them guilty of violating minimum wage laws when they failed to pay over 500 unpaid interns working at various magazines published by Hearst Corporation between 2005-2013.
These cases highlight how important it is for employers to correctly identify their workers according to labor laws so that they can avoid costly fines and penalties associated with misclassification violations. Noncompliance could potentially put them out of business altogether if left unchecked or unresolved through litigation proceedings initiated by disgruntled former workers seeking damages due to violations related to worker classification status issues.
Interns Under the ACA: Affordable Care Act Health Coverage Rules
Workers’ compensation isn’t the only benefits question that comes up around internships — employers and interns also ask whether interns under the ACA are entitled to health coverage. The Affordable Care Act treats interns the same way it treats any other worker for eligibility purposes, based on hours and pay, not job title.
If a company is an “applicable large employer” under the ACA — generally 50 or more full-time equivalent employees — it is required to offer health coverage to substantially all of its full-time employees, defined as those averaging 30 or more hours per week. The IRS treats a paid, full-time intern the same as any other full-time employee for this purpose, so excluding paid interns from a group health plan can expose a large employer to Employer Shared Responsibility penalties. Employers sometimes rely on the ACA’s seasonal-employee exception for short summer internships, but that exception only holds up if the company’s measurement period is properly structured — assuming the protection applies without confirming it can leave an employer exposed to penalty notices.
Unpaid interns, by contrast, are not considered employees under the ACA any more than they are under workers’ compensation law, so employers are not required to offer them coverage. In practice, many interns — paid or unpaid — remain on a parent’s health plan or their university’s coverage through age 26, which is part of why this question is more relevant to an employer’s compliance obligations than to most individual interns’ day-to-day coverage needs.
FAQs
Are Interns Covered By Workers’ Compensation?
It depends on whether the intern is paid or unpaid. Paid interns are generally treated as employees and are covered by their employer’s workers’ compensation policy. Unpaid interns are not automatically covered, but they may be entitled to benefits if the employer controls their schedule and duties in a way that resembles a normal employment relationship.
Are Unpaid Interns Covered By Workers’ Compensation?
In most cases, no — a properly structured unpaid internship that meets California’s DIR criteria does not create an employment relationship, so the intern is not eligible for workers’ compensation. However, if the employer fails to meet those criteria (for example, by directing the intern’s day-to-day work like a regular employee), the intern may be reclassified as an employee and become eligible for benefits.
What Is The Connection Between Workers’ Comp And Internships?
Workers’ compensation eligibility for internships comes down to classification. If an internship functions like a real job — set hours, employer-directed tasks, and some form of compensation or benefit — workers’ comp law tends to treat the intern like any other employee. If the internship is structured as genuine vocational training with no compensation and no displacement of paid staff, workers’ comp generally does not apply.
Are Interns Under The ACA Required To Receive Health Coverage?
It depends on the size of the employer and whether the intern is paid. Under the Affordable Care Act, “applicable large employers” (generally 50 or more full-time equivalent employees) must offer health coverage to full-time employees, and the IRS treats paid interns working 30+ hours per week the same as any other full-time employee. Unpaid interns are not employees for ACA purposes and are not owed coverage.
Does The Affordable Care Act Apply To Interns?
Yes, in the sense that a large employer cannot simply exclude paid, full-time interns from its ACA compliance calculations. Employers sometimes rely on the ACA’s seasonal-employee exception for short-term summer internships, but that exception only applies if the measurement period is structured correctly — getting it wrong can trigger employer shared responsibility penalties.
What Should An Intern Do If They’re Injured On The Job?
An injured intern should report the injury to a supervisor immediately, get medical attention, and keep records of how the injury happened. Whether the path forward is a workers’ compensation claim or another type of claim depends on how the internship is classified, which is why it’s worth having an attorney review the facts.
Can An Intern Be Reclassified As An Employee After An Injury?
Yes. Courts and the Division of Labor Standards Enforcement look at the reality of the working relationship, not just the internship’s label. If an employer treated an unpaid intern like staff — controlling their schedule, assigning regular job duties, or gaining an immediate business benefit from their work — the intern can be reclassified as an employee entitled to workers’ compensation and other employment protections.
Conclusion
It is important for employers in California who wish to hire unpaid interns to understand what constitutes an intern according to labor laws so that they can avoid costly fines and penalties associated with misclassification violations. Consequences could potentially put them out of business altogether if left unchecked or unresolved through litigation proceedings initiated by disgruntled former workers seeking damages due to violations related to worker classification status issues such as those mentioned above involving Fox Searchlight Pictures Inc., Hearst Corporation, etc.
Additionally, employers should also keep detailed records documenting each step taken during the hiring process including job descriptions interview notes background checks (if applicable), etc. This ensures that they can prove compliance with labor laws if called into question by authorities or challenged in court by former interns seeking damages due to misclassification of other violations related to worker classification.
For those facing a difficult workers’ compensation or employment matter, contact Wax & Wax, A Law Corporation.
