By Kristin w. Roscoe, JD
Staff Attorney
The Therapist
May/June 2021

To say that California’s labor laws are a bit complex is an understatement. From changes that impact independent contractors to the constant modifications to the minimum wage, California’s labor laws offer a never-ending maze for employers.¹  One area of labor law that CAMFT gets many questions about is whether an Associate Marriage and Family Therapist (AMFT) can legally work as an unpaid volunteer intern.

Pre-licensees are prohibited from being employed as independent contractors, but they are permitted to work as either a volunteer or a W-2 employee.² Over the years, CAMFT has interpreted rulings and opinions from the Labor Commissioner of the State of California (the “Commissioner”) as well as other relevant laws to provide general guidance to employers and pre-licensees on this important issue. In June 2020, the Commissioner issued a ruling in a case brought by an AMFT against their former employer.³ This ruling offers guidance on how the Commissioner would likely analyze whether an unpaid post degree AMFT can be classified as an unpaid intern in nonprofit settings. This ruling is consistent with the recommendations CAMFT has offered over the years in response to other rulings and laws that relate to unpaid internships.4 In this article, we will review the Commissioner’s June 2020 ruling and its implications for employers seeking to hire AMFTs as unpaid interns.

Early Legal Challenges to Unpaid Internships

• In 2011, a famous lawsuit involving unpaid interns in the entertainment industry highlighted the issue of whether some interns really should be classified as employees.⁵ The lawsuit alleged that Fox Searchlight violated federal and New York state labor laws with its failure to pay minimum wages and overtime to interns who worked on the film Black Swan. Five years later, the case finally settled out of court in favor of the interns. The Black Swan case was a game changer in a world saturated with unpaid internships. However, the unpaid Black Swan interns were not seeking licensure in any healing arts at the time, so the ruling left open how the Commissioner might address the unpaid work of an AMFT.
   
• It was not until 2013 that the Commissioner released a ruling involving the work of a post-doctoral psychology intern named Johanna Workman that began to solidify how AMFT post-degree internships would be reviewed.⁶ In the Workman case, she was not enrolled in school when she provided individual counseling to faculty and staff at the University of California San Francisco. Her services primarily benefitted her employer since she provided counseling services that could be performed by regular employees. The Commissioner found that Ms. Workman should have been paid as an employee, and she was awarded $14,126.67 for unpaid wages, liquidated damages, and interest. She was a psychology intern, but her work—patient evaluation, short-term counseling, crisis intervention—was in many ways similar to the direct services provided by AMFTs, and she was accruing hours towards licensure as AMFTs do. Therefore, this ruling provided the most direct insight at the time into how the Labor Commission might rule in the case of an unpaid AMFT.⁷

CAMFT’s 2019 Statement on Paying Associates
In December 2019, the CAMFT Board of Directors issued a statement on paying associates as a best practice of supervision.8 In the statement, the CAMFT Board highlighted the long-term negative effects of unpaid or volunteer work on both the well-being of associates and the quality of services rendered to patients. The Board’s request was for employers to pay AMFTs “as a best practice in valuing equality, inclusion, and diversity in the MFT profession.”

June 2020 Labor Ruling
In June 2020, the California Labor Commission ruled on a claim brought by an AMFT against a university counseling center. The Labor Commissioner applied the U.S. Department of Labor’s six-criteria test to determine whether the AMFT, who had been an unpaid intern at the counseling center, should have been paid as an employee for her work.

Facts of the Claim
From May 11, 2014, until December 12, 2014, the AMFT was employed as a post-degree, pre-licensed MFT intern at a university’s counseling center (the “University”). The AMFT filed a claim against the University with the Labor Commissioner alleging that she should have been paid as an employee for the counseling work she completed from August 31, 2014, through December 7, 2014.9 During this timeframe, the AMFT worked approximately 10 to 15 hours per week without pay.

At the hearing conducted by the Commissioner, the AMFT testified that she began work at the university’s counseling center while enrolled as a student as a “Trainee in Practicum.” The AMFT graduated from her degree program on May 11, 2014.

After graduation, she continued to provide psychotherapy and counseling services to the University’s students/patients at the counseling center. The AMFT testified that the University told her that it was “looking to pay postgraduate therapists as they were aware that it is required by law” but that such payment was not yet approved.

During her post-degree work at the University, the AMFT continued to provide professional counseling and psychotherapy services to individuals and couples as an unpaid intern. The AMFT testified that after graduation she was assigned patients to treat who were beyond the scope of competency for pre-degree therapists. These included cases involving high-level suicidal ideations, cases where patients who were on an academic watch list necessitated additional care to ensure they were able to remain enrolled in the University, cases requiring additional coordination with medical staff and disability services, and cases involving complex sexuality and gender-orientation issues. 

The AMFT testified that apart from her required hours of BBS supervision she did not receive additional supervision during her sessions with patients. The AMFT testified that her BBS supervisor signed her BBS weekly hours forms but never observed her work and rarely provided feedback.

The University testified that the AMFT was not considered an employee of the University and that the University did not pay any graduate or postgraduate pre-licensed therapists working in the counseling center. The University was able to demonstrate to the Commissioner that the only difference between pre-degree and post-degree therapists working at the counseling center was that the post-degree therapists received a larger caseload. The University testified that pedigree therapists and postgraduate therapists receive the same training. Further, the University testified that after January 2015 there were two or three individuals in the role previously occupied by the AMFT that they paid minimum wage for one semester.

The Commissioner’s Analysis and Findings
In its evaluation of the claim, the Commissioner applied the six-criteria test to determine whether the AMFT could have been an unpaid intern or should have been classified as an employee. Under this test, an internship program must meet all six criteria to be permitted to have individuals work as unpaid interns; if it fails to meet all six criteria, the program must categorize individuals as W-2 employees.

THE SIX-CRITERIA TEST

The Commissioner heard all the circumstances surrounding the AMFT’s internship, applied the six-criteria test, and found the following:

1. The AMFT was no longer enrolled in a degree program, as the AMFT was “not enrolled in a college or university.” Additionally, the postgraduate internship at the university counseling center “was not tied to either an educational or vocational program.”
2. The AMFT did benefit from the post-degree internship in that she was able to earn hours of experience toward her MFT licensure.
3. The AMFT worked with high-risk and complex patients that were beyond the scope of competency for pre-degree trainees. Additionally, while the AMFT did not displace any employees at the University’s counseling center, she did perform work that trainees could not perform and did so without close supervision. The Commissioner accepted the AMFT’s testimony that the only documented supervision the AMFT received was two hours of group supervision per week as required by the BBS. In particular, the Commissioner noted that the AMFT’s supervisor did not observe her therapy sessions and rarely provided feedback to her.¹⁰
4. The University was the primary beneficiary of the internship because the A MFT provided counseling and psychotherapy services to the University’s students. As a result of the AMFT’s work, the students/patients continued attending the University and paying enrollment fees, which benefitted the University.
5. Though the Commissioner did not offer an analysis of the fifth criteria, the University testified that trainees had no expectation they would be hired at the end of their practicum program.
6. The AMFT held a good-faith belief that she would be paid for her post-degree work. During her testimony, the AMFT stated that the director of the University’s counseling center had represented that the University was “looking to pay postgraduate therapists as they were aware that it is required by law” but that payment had not yet been approved. The AMFT testified that she “was working under the belief that she was going to get paid” and that the director “did not state how much [the AMFT] would be earning.”

“Provided the six criteria…are met, where educational or training programs are designed to provide students with professional experience in the furtherance of their education, and the training is academically oriented for the benefit of the students, it is [the U.S. Department of Labor’s] position that the students will not be considered employees.”¹¹ With this direction from the U.S. Department of Labor in mind, the Commissioner concluded that based on the totality of the circumstances the AMFT should not have been classified as an “exempt intern” but rather should have been classified as an employee entitled to the protection of wage and hour laws.¹²

The Penalties for Misclassification of the AMFT
The Commissioner determined that there had been no agreement between the AMFT and the University regarding her wages. For this reason, she was entitled to compensation at minimum wage for her hours worked. In conclusion, the Labor Commissioner determined that the AMFT was not an exempt intern but an employee entitled to the protections of California’s wage and hour laws. The breakdown of the award to the AMFT was as follows:

• Unpaid regular wages based on the minimum wage rate, as there had been no agreement about the expected wage amount; 13
• Liquidated damages equal to the wages unlawfully unpaid and the interest on that amount; and
• Interest based on the due and previously unpaid wages owed to the AMFT.¹⁴

Impact on Employers
Based on this ruling and the ruling in the Workman case, a post-degree internship program must meet the six-criteria test discussed above to ensure that it is exempt from California’s wage and hour laws (i.e., may permissibly be offered as an unpaid internship). If a program meets all six criteria, the Labor Commissioner will likely find that it is in compliance with both state and federal law if it classifies those individuals as unpaid exempt interns. These individuals then do not meet the definition of “employees” for purposes of California’s strict wage and hour laws and may work as unpaid interns. Note, as the university counseling center in the 2020 labor case experienced, the AMFT only needs to show that some of the criteria were not met.¹⁵

Unpaid Intern Versus Volunteer
This ruling in no way diminishes the vital role that volunteers play in the nonprofit community, nor does it directly impact trainees still enrolled in their degree programs. Individuals are free to volunteer their time to those deserving nonprofits that are experiencing so much need in these tumultuous times. Under the federal Fair Labor Standards Act, a volunteer is generally not considered an employee if the individual volunteers freely for public service to achieve religious or humanitarian objectives without contemplation or receipt of compensation. According to the U.S. Department of Labor, the assumption is that these volunteers generally do not contribute to a nonprofit’s commercial activities (such as a gift shop).¹⁶ Additionally, volunteers typically work on a part-time basis and do not displace regular workers or perform work that would otherwise be performed by regular employees.

The federal expectations are largely mirrored by California law, which defines a volunteer as “an individual who performs work for civic, charitable, or humanitarian reasons for a public agency or corporation qualified under Section 501(c)(3) of the Internal Revenue Code as a tax-exempt organization, without promise, expectation, or receipt of any compensation for work performed.”¹⁷ Under these circumstances, state and federal minimum wage considerations would not apply, and an individual is permitted to volunteer their time.

Conclusion
Just as when a therapist evaluates a patient and determines a diagnosis, facts and circumstances matter when it comes to how the Labor Commissioner will rule in a particular case. A small change in facts may change the outcome of a claim/lawsuit. Both AMFTs and the clinic and nonprofit employers who offer them unpaid internships should be familiar with this 2020 ruling and closely review the six criteria test to determine whether an internship program can legally offer unpaid exempt internships. Remember, the University in the 2020 ruling did have some facts that leaned in its favor, yet it was ordered to pay substantial back wages and damages to the AMFT because it failed to meet all six criteria when it offered an unpaid internship.

In the decade since the Black Swan case, issues relating to wage disparities and awareness of the application of wage and hour laws have only increased. While CAMFT staff attorneys can provide basic information on employment issues, the intricacies of California’s employment laws are largely outside the scope of CAMFT staff attorneys. For this reason, CAMFT recommends that employers of AMFTs seek consultation from a licensed attorney knowledgeable in California’s labor and employment laws to determine the appropriateness of offering an unpaid internship.

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Kristin W. Roscoe, JD, is a staff attorney at CAMFT. Kristin is available to answer member calls regarding legal, ethical, and licensure issues.

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Endnotes
¹ For more information on recent changes to independent contractor laws, please review “New Labor Law May Offer a Pathway to Independent Contractor Status” by Sara Jasper, The Therapist (Nov./Dec. 2020), https://www.camft.org/Resources/ Legal-Articles/Chronological-Article-List/new-labor-law-may-offera- pathway-to-independent-contractor-status.

² Bus. & Prof. Code § 4980.43.3(a).

³ State of California, Department of Industrial Relations (June 16, 2020), available at https://www.camft.org/Portals/0/PDFs/AMFTLabor- Ruling.pdf?ver=2020-09-08-125440-243.

⁴ Id., p.5. Please note, this ruling does not apply to those students enrolled in a degree program and providing volunteer time through a training program; it applies solely to post-degree unpaid internships.

⁵ Glatt v. Fox Searchlight Pictures, Inc., Case No. 11-cv-6784, 2013 WL 2495140 (S.D.N.Y. 2013).

⁶ Johanna Workman v. Regents of the University of California, San Francisco Branch, Case No. 11-43384 HM (Labor Commissioner, State of California, May 13, 2013).

⁷ “Recent Labor Board Ruling Sets Precedent for California Internships by Ann Tran-Lien, The Therapist (May/June 2015), https://www.camft.org/Resources/Legal-Articles/Chronological-Art

⁹ The AMFT did not file her Complaint against the University until August 28, 2017. The statute of limitations to bring a wage claim is three years from the date of the most recent violation, meaning the unpaid wages for work performed between May 11, 2017, and August 27, 2014, were not recoverable. Cal. Code of Civ. Proc. § 338.

¹⁰ It is worth remembering that the supervision provided to this AMFT occurred in 2014. In the ensuing years, the BBS has increased the burden on supervisors to ensure that pre-licensees are receiving appropriate supervision. This means that the supervisory deficiencies outlined in this case, such as the alleged failure to observe the AMFT’s therapy sessions and rare provision of feedback, likely have been addressed by recent changes to BBS supervision regulations.

¹¹ DOL OL 05/17/04, available at https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/2004_05_17_05FLSA_NA_internship.pdf. 

¹² These wage and hour requirements are laid out in Industrial Welfare Commission Wage Order 4-2001, which regulates the wages, hours, and working conditions for professional, technical, clerical, mechanical, and similar occupational categories. Available at https://www.dir.ca.gov/iwc/Wage_orders_January2001/IWCArticle4.html.

¹³ Please note, as of January 1, 2021, the minimum wage in California is $13.00 per hour for employers with 25 employees or less and $14.00 per hour for employers with 26 employees or more. Additionally, some cities across the state have higher minimum wage standards that must be met. For more information, review the Department of Industrial Relations information on minimum wage changes available at https://www.dir.ca.gov/dlse/ faq_minimumwage.htm.

¹⁴ In her complaint, the AMFT additionally sought Waiting Time Penalties under Labor Code section 203. These penalties may be assessed when there is a willful failure to pay wages owed to the employee at the end of the employment relationship. The Commissioner declined to assign these additional penalties as there was sufficient evidence presented by the University to show a good-faith (though ultimately incorrect) belief that its classification of the AMFT as an exempt intern was proper.

¹⁵ Courts have used the “primary beneficiary test” to determine whether an intern or student working in a for-profit setting such as a private practice is, in fact, an employee under the Fair Labor Standards Act. This test allows courts to examine the “economic reality” of the intern-employer relationship to determine which party is the “primary beneficiary.” Courts have identified the following seven factors for the test:

¹⁶ U.S. Department of Labor Fact Sheet #14A, https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/whdfs14a.pdf. See also “Are Nonprofits Commercial Enterprises” by David G. Jensen, JD, The Therapist (July/August 2013), https://www.camft.org/Resources/Legal-Articles/Chronological-Article-List/are-nonprofitscommercial-enterprises.

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 similar to that 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 during 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.

¹⁷ Labor Code section 1720.4(a).

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This article is not intended to serve as legal advice and is offered for educational purposes only. The information provided should not be used as a substitute for independent legal advice and it is not intended to address every situation that could potentially arise. Please be aware that laws, regulations and technical standards change over time. As a result, it is important to verify and update any reference or information that is provided in this article.