HIRING INTERNS? (March 2012)

With summer around the corner students will be available for summer internships. Hiring unpaid interns may seem to be an attractive way for a company to keep its labor costs down but – BEWARE. If you aren’t careful, your company could face costly labor claims.

It is generally known that employees must be paid minimum wage and overtime pay, if applicable, for all hours worked. There is an exception for unpaid interns, but only if certain criteria are met. According to the U.S. Department of Labor, the following six criteria must be met in order for a company to legally hire an unpaid intern:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If ALL six of the criteria listed above are not met, then the intern must be paid. Structuring an internship program around an intern’s educational experience rather than the employer’s operations is more likely to meet the educational environment criteria. (For example, where a school gives credit for the internship.) If the intern substitutes for regular company employees or augments the company workforce, then the intern must be paid.

If you think that unpaid interns don’t sue, then you may want to think again. Earlier this year a class of unpaid interns who worked at Hearst Corporation filed a lawsuit for unpaid wages. In September of 2011 a class of unpaid interns sued Fox Searchlight Pictures also for unpaid wages.

If you have or will have unpaid interns, you should carefully structure your internship program to comply with the labor laws.


The California Transparency in Supply Chains Act, effective as of January 1, 2012, requires companies to disclose efforts made to eradicate slavery and human trafficking from its direct supply chain.

Who Does This Law Apply To?
This law applies to every "retail seller" and "manufacturer" doing business in California and having annual worldwide gross receipts exceeding one hundred million dollars ($100,000,000.). Even if your business in California is negligible, if your worldwide gross receipts meet this threshold, then the law applies to you.

If you are a supplier to a company that this law applies to then you should be prepared. Among other things, the company you sell to may require you to comply with certain standards related to trafficking and slavery in supply chains. You may also be asked to certify that materials you sell comply with the laws regarding slavery and human trafficking.

What Must be Disclosed.
At a minimum, the retailer or manufacturer must disclose the extent they do each of the following:
(1) Engages in verification of product supply chains to evaluate and address risks of human trafficking and slavery. The disclosure must specify if the verification was not conducted by a third party.
(2) Conducts audits of suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains. The disclosure must specify if the verification was not an independent, unannounced audit.
(3) Requires direct suppliers to certify that materials incorporated into the product comply with the laws regarding slavery and human trafficking of the country or countries in which they are doing business.
(4) Maintains internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.
(5) Provides company employees and management, who have direct responsibility for supply chain management, training on human trafficking and slavery, particularly with respect to mitigating risks within the supply chains of products.

Where To Disclose.
The required disclosure must be posted on the company’s internet website. In addition, a conspicuous and clear link to the required disclosure must be placed on the homepage of the website. If the company does not have a website, then the company must provide a written disclosure with 30 days of receiving a consumer request for the disclosure.

What Should You Do?
If this law applies to you, you should, at a minimum, do the following:
1. Prepare a policy statement addressing the company’s position on compliance with the law.
2. Prepare a statement which addresses the 5 areas of disclosure listed above.
3. Post the required disclosure and link on the company website.
4. Prepare a notice to suppliers regarding compliance with this law.
5. Audit your supply chain to determine compliance levels.
6. Implement policies, procedures and standards to comply with this law.
7. Review your contracts with suppliers in light of this new law.


Department of Transportation Restricts Cell Phone Use (Feb. 2012)

Wage Theft Prevention Act (Dec. 2011)

Court Says California Trucking Company Need Not Provide Meal Breaks to Employees  (Nov.

California Heat Illness Prevention Regulations  (July 2011)


All Articles are for informational purposes only and do not constitute legal advice. No representation is made that the information is current or complete and nothing herein creates an attorney-client relationship between the writer and recipient. The information is not to be considered as legal advice or legal opinions. You should not act or rely on any information herein without first consulting with an attorney.