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The Legal Department articles are not intended to serve as legal advice and are 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 the article.
The Labor Commissioner of California issued a ruling that will help employers determine whether an intern can be classified as a volunteer or as an employee.
by Ann Tran-Lien, JD
Managing Director, Legal Affairs
Throughout the years, CAMFT has provided our interpretation of pertinent California labor laws, as well as suggestions and recommendations to employers and prelicensed members on the employment issues fundamental to the LMFT profession. When two unpaid interns filed a lawsuit against Fox Searchlight in 2011 demanding back pay for their work as “employees” (in what is widely known as the “Black Swan case”),1 CAMFT experienced a rise in questions and concerns regarding the legalities of unpaid internships. Because the Black Swan case involved interns employed in the entertainment industry, employers of MFT Registered Interns were uncertain of its applicability to MFT Interns in California.
In May of 2013, the Labor Commissioner of the State of California (“Labor Commissioner”) issued a momentous and highly relevant ruling that provides precedent for employers of post-graduate interns; this ruling will go a long way in helping to determine whether an intern can be classified as a volunteer or as an employee.2The case, Johanna Workman v. Regents of the University of California, San Francisco Branch, harmonizes with CAMFT’s interpretation of California’s labor laws and our general recommendation to classify Registered Interns as W-2 employees.
From August 6, 2012 to January 31, 2013, the Regents of the University of California, San Francisco Branch (UCSF), employed Ms. Johanna Workman as a Post-Doctoral Psychology Intern. The position required Ms. Workman to provide individual counseling to faculty and staff at UCSF and at the UCSF Office of President. UCSF paid Ms. Workman a monthly stipend at the rate of $1,607.78. Ms. Workman’s Intern Agreement with UCSF stated the internship would be for 17 hours per week. Any hours beyond the 17 hours were unpaid and credited toward Ms. Workman’s post-doctoral licensing requirements. Ms. Workman’s payroll taxes were withheld from her paychecks.
At UCSF, Ms. Workman worked ten hours per day, five days per week. She provided direct services to clients including evaluation, short-term counseling, crisis intervention and referrals. Her assignments included, but were not limited to, intake and clinical assessments of new clients; brief clinical intervention to clients; referral of clients to professional services as needed; telephone consultation with supervisors; lead employee support groups; and participation with the supervisor in management consultation and work unit intervention. Ms. Workman met with her supervisor, provided by UCSF, two hours per week and the majority of the hours she worked were unsupervised.
Ms. Workman acquired her doctoral degree in Clinical Psychology in January 2011 and was not enrolled in school at the time of her position with UCSF. Ms. Workman was completing 1,500 hours toward her Psychologist license and her internship with UCSF was not connected to her graduate program or any other academic program. Ms. Workman alleged she performed duties of a regular employee and UCSF had misclassified her position as an intern instead of an employee. UCSF contended Ms. Workman was not an employee, but an intern. From August 6, 2012 to January 31, 2013, Ms. Workman worked a total of 858 hours which UCSF failed to compensate.
The Legal Analysis
California laws do not expressly exempt individuals participating in an “internship” from the minimum wage and overtime requirements. California’s minimum wage requirements are set forth in various statutes, as well as in Orders of the Industrial Welfare Commission. The Fair Labor Standards Act (FLSA) is federal law that provides minimum wage requirements and other protections for employees.
The United States Department of Labor puts forth a “Six-Criteria” test that must be applied when determining whether an intern is exempt from the FLSA. An internship program must meet all six criteria to be exempt from the wage and employee protections put forth by the FLSA. The Six-Criteria test is as follows:
The Labor Commissioner applied the Six- Criteria test to analyze whether Ms. Workman should have been classified as a W-2 employee and paid at least minimum wage for each hour worked. The Labor Commissioner found the following: Ms. Workman was not enrolled in a college or university. Ms. Workman’s duties were not directly related to the training and the educational objectives of a program. Ms. Workman’s services at UCSF’s internship program predominantly benefitted UCSF since Ms. Workman provided counseling services to its staff, a job that can be performed by regular employees. The Labor Commissioner opined Ms. Workman’s job is “an integral part of the business activities” which UCSF “derives a substantial economic benefit.” In addition, the Labor Commissioner perceived Ms. Workman’s performed substantial independent work as she met with her supervisor for only two times a week.
The Labor Commissioner concluded UCSF’s internship program did not satisfy all six criteria, and thus, found Ms. Workman to be an employee and not exempt from the state’s minimum wage law.
The Labor Commissioner ordered the Regents of the University of California, San Francisco Branch to pay Ms. Workman a total sum of $14,126.67 for unpaid wages, liquidated damages, and interest. The breakdown of the total sum is as follows: $6,864 in unpaid wages; $6,864 in liquidated damages; and $398.67 in interest. California law provides an employee is entitled to recover liquidated damages in an amount equal to the wages unlawfully unpaid as well as interest.3
How is this ruling relevant to MFT Registered Interns? A review of the facts of this case reveals four key similarities to how many MFT internships are currently structured.
Summary of CAMFT’s Interpretation of the Pertinent Laws
The Labor Commissioner’s ruling in this case is in harmony with CAMFT’s interpretation of the applicable labor and employment laws. The following is a summary of laws and opinions employers of MFT Registered Interns are recommended to review.
The Six-Criteria Test: As referenced and applied by the Labor Commissioner in Ms. Workman’s labor case, the Six-Criteria test was established by the U.S. Department of Labor, Wage and Hour Division (WHD) to help determine whether an internship or training program is excluded from the FLSA’s minimum wage requirements. For a copy of the Fact Sheet produced by the WHD, visit the U.S. Department of labor, WHD website at http://www.dol.gov/whd/ and search for “Fact Sheet #71.” If an employer determines an intern should be classified as an employee, rather than a volunteer based on these criteria, the intern must be paid minimum wage for each hour that he or she performs work for the employer. The minimum wage in most areas of California is $9, which will be increased to $10 effective January 1, 2016 ($12.25 in Oakland; $9.60 in Richmond; $9.75 in San Diego; $11.05 in San Francisco).
It is interesting to note that the Labor Commissioner applied the Six-Criteria test in the public sector, and not just in the private sector. Generally, nonprofits do not receive automatic exemption from compliance with the wage and hour laws. If a work setting, whether a private practice, a public institution, or a nonprofit, is exempt from California’s wage and hour laws, the key issue would be whether the setting is operating a “commercial enterprise.” For an in-depth look at “commercial enterprises,” read Staff Attorney, David Jensen’s article, “Part 2: Are Nonprofits ‘Commercial Enterprises’?” [The Therapist (July/August 2013)].
Pertinent State Labor Laws: An MFT Registered Intern who is classified as an employee is subject to California’s labor laws. One of the principal issues for therapy internships is whether employers of MFT Interns can charge intern employees for supervision and other employment expenses. Upon review of the relevant labor laws, and with input from outside legal counsel who specialize in employment law, CAMFT strongly recommends employers not to require intern employees to pay back a portion of their wages for supervision or any employer’s operating costs.
California Labor Code section 221 specifically prohibits employers to require employees to relinquish or pay back a portion of their wages to their employers. In addition, Labor Code sections 450 and 2802 prohibit employers from charging employees for anything that benefits the employer or anything that could be considered an obligation of the employer. For further reading on CAMFT’s interpretation of the labor laws and our recommendations on this issue, see Sara Kashing’s article, “Part I: Charging Trainees and Intern Employees for Supervision” [The Therapist (July/August 2013)].
The MFT licensing laws, particularly Business and Professions Code sections 4980.43(b) and 4980.43(e)(1) require experience to be gained either as an employee or as a volunteer and encourage employers to provide fair remuneration to interns. Although the MFT licensing laws do not specifically address the issue of paying for supervision, the issue was clarified by former Staff Counsel for the Department of Consumer Affairs, James Maynard, in a memorandum dated March 8, 2010 to the BBS Policy and Advocacy Committee. Mr. Maynard states “The Board’s laws generally contemplate that interns should be paid for their work as employees. To the extent that interns are paid as employees, their employer may not require such interns to pay for the required supervision.”
In addition, the Psychologist licensing regulations expressly prohibit an employer and a primary supervisor or a delegated supervisor to receive payment, monetary or otherwise, from the supervisee (pre or post-doctoral) for the purpose of providing supervision.4
Although Ms. Workman’s case may not necessarily apply to all internships or employment of interns in California, the ruling should certainly be on employers’ radar when classifying MFT Registered Interns. According to ProPublica,5 an independent, non-profit newsroom that produces investigative journalism in the public interest, “the federal ruling that found Fox Searchlight Pictures needed to pay ‘Black Swan’s’ interns minimum wage has begun a rising tide of new lawsuits.” ProPublica has published a list of as many as 35 lawsuit filings pertaining to alleged unlawful unpaid internships.6 CAMFT recommends affected individuals seek legal consultation from a knowledgeable employment/labor law attorney. It is important that the entire facts and circumstances of a particular situation be examined to determine the appropriate internship arrangement.
Ann Tran-Lien, JD, is a staff attorney and the Managing Director of Legal Affairs at CAMFT. Ann is available to answer member calls regarding legal, ethical, and licensure issues.
Individuals may contact a local Labor Commissioner office for general information about wage and hour laws (http://www.dir. ca.gov/dlse/DistrictOffices.htm).
The U.S. Department of Labor, Wage and Hour Division may also answer questions about federal wage and hour laws and can be reached at 1-866-487-9243 or at district offices in California (http://www.dol.gov/whd/ america2.htm#California).
1 Glatt, v. Fox Searchlight Pictures, Inc., No. 11-cv-6784, 2013 WL 2495140 (S.D.N.Y. 2013) (The court concluded two unpaid interns working on the production of “Black Swan” were to be paid back pay under both federal and state wage and hour laws)
2 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)
3 California Labor Code §1194.2
4 16 CCR §1387; 16 CCR §1387.3(c)(4); and 16 CCR §1391.8(a)
5 http://www.propublica.org/about/ (ProPublica was founded by Paul Steiger, the former managing editor of The Wall Street Journal. It is now led by Stephen Engelberg, a former managing editor of The Oregonian and former investigative editor of The New York Times, and Richard Tofel, the former assistant publisher of The Wall Street Journal.)
6 The information can be found at https://projects.propublica.org/ graphics/intern-suits