Employment status of culinary externs

STATE OF CALIFORNIA GRAY DAVIS, Governor
DEPARTMENT OF INDUSTRIAL RELATIONS
DIVISION OF LABOR STANDARDS ENFORCEMENT
LEGAL SECTION
455 Golden Gate Avenue, 9th Floor
San Francisco, California 94102
Telephone (415) 703-4863
Fax (415) 703-4806

MILES E. LOCKER, Chief Counsel

May 17, 2000

David Avalos, CCE
President
Golden State Culinary Institute
333 Sunrise Avenue, Suite 400
Roseville, California 95661

Re: Employment Status of Culinary Externs

Dear Mr. Avalos:

This letter is in response to your request for a "formal ruling" with regard to the externship
program of the Golden Gate Culinary Institute (hereinafter "GSCI".), and particularly, whether
food service operators (restaurants, country clubs, hotels, etc.) that provide externship
placements for GSCI students, are required to pay wages to the students during their
externship. For clarification, the Division of Labor Standards Enforcement ("DLSE") does not
provide "formal rulings" based on written requests. Such rulings or decisions are issued only
after a factual hearing on the merits of a particular case. However, DLSE can provide you with
a written legal opinion based on the facts presented in an effort to assist you in understanding
and applying the current labor laws to your particular inquiry. In that regard, our legal
opinion with respect to the employment status of externs is as follows.

You state that as part of the 16 month Associates Occupational Studies in Culinary Arts
Program, students spend 18 weeks at selected restaurants, hotels and country clubs in training
with these food service operators. The purpose of the 18-week externship is to provide the
students an opportunity to acquire practical experience as part of a continuation of their
formal education. The supervising chef monitors and evaluates the student's training, which
evaluations are recorded in the Student's Weekly Training Ledger. We note that under the
"Externship" section of GSCI's catalogue, the externship program is described as "Students
spend 20 weeks on-the-job in a paid externship in the kitchens of restaurants, hotels, and
clubs."

You emphasize that the student does not displace employees of the food service operator. The
student returns to GSCI for an additional two terms of classes after completion of the
externship. Thereafter, the student receives his or her degree upon successful completion of
comprehensive written and practical exams.

Industrial Welfare Commission Order 5, which governs wages and hours worked for restaurant
establishments, defines "employ" to mean "to engage, suffer, or permit to work." However, the
definition of "suffer or permit" to work was not intended to stamp all persons as employees who,
for their own advantage, work without an express or implied compensation agreement. Walling v.
Portland Terminal Company 330 U.S. 148, 152, 67 S.Ct. 639, 641, 91 L.Ed. 809 (1947)1

Economic reality is the test to determine an employment relationship. Factors to be considered
in analyzing whether an employment relationship exists under the economic reality test include:
(1) whether the student is closely supervised during his or her externship experience; (2)
whether records are maintained with respect to the on-hands training received; (3) whether the
student's on-hands training activities are directly related to the educational goals; (4)
whether the student replaces regular workers; (5) whether or not the student becomes an
integral part of the principal activity of the business in which the student extern was placed;
and (6) whether the business entity derives any consequential economic benefit from work
performed by an individual. Marshall v. Baptist Hospital, Inc. (D.C.M.D. 1979) 473 F.Supp. 465
(overruled on other grounds 668 F.2d 234); Souder v. Brennan (D.D.C. 1973) 367 F.Supp. 808, 813.

1 DLSE adopts federal case law and its interpretation of the Fair Labor Standards Act of 1938,
29 U.S.C.A. § 201, et seq., where such interpretation is not inconsistent with state law.

As an example, in Marshall, supra, X-ray students were found to be employees of the hospital and
entitled to be paid wages because the students performed administrative and clerical work in
addition to their X-ray training, received little or no supervision, displaced regular workers,
and functioned as an integral part of the operation of the hospital. Thus, the students' work
went beyond a mere training experience which resulted in economic benefit to the hospital.
Marshall, Id. 473 F.Supp. 471-778.2 On the other hand, an undergraduate pharmacy program that
provides as part of its curriculum a clinical externship program in a hospital or community
pharmacy has been construed as not to create an employment relationship for wage and hour
purposes due to the educational opportunities the externship program provided to the students.
DOL, WH-423 (1997)

Whether an employment relationship exists between a student extern and a business requires a
factual analysis on a case-by-case basis. The externship program offered by GSCI entails
placement of student externs in a variety of type of restaurant settings, each of which may
require different tasks to be undertaken by the externs. For example, if a GSCI student extern
in one restaurant performs culinary tasks directly pertinent to his or her education only, is
closely supervised, does not displace regular workers, and records are maintained with respect
to the extern's work, DLSE would most likely conclude that an employment relationship does not
exist and that no wages need to be paid to the extern. Conversely, if another GSCI student
extern is placed in a different restaurant establishment where he or she is required to bus
tables or wash dishes, DLSE most

2 For purposes of workers' compensation insurance, a student medical assistant performing
services at a hospital as part of an externship program has been found to be an employee of the
hospital. Barragan v. Workers' Compensation Appeals Board (1987) 195 Cal.App.3d 637. Based on
the Barragan case, DLSE would strongly recommend that GSCI confirm that the restaurant
establishments at which its externs are placed have in effect valid workers' compensation
insurance and that the externs are covered under the restaurants' workers' compensation
insurance policies.

probably would conclude that the economic reality of the relationship is that of an
employer-employee relationship because the extern's services are not directly related to
educational goals but instead, have become an integral part of the restaurant's activities from
which the restaurant derives a substantial economic benefit.

Unfortunately, because a separate factual analysis of the nature of the work performed by an
extern is required for each restaurant establishment, DLSE cannot provide GSCI with a blanket
legal opinion that would encompass each and every externship environment GSCI's externs may
encounter. However, DLSE does conclude that current GSCI students would have a reasonable and
justifiable expectation that they would be paid for their externship work based on the express
provision contained in the GSCI catalogue that the externship is paid.

I trust this letter adequately responds to your inquiry. Thank you for your interest in
California labor laws.

Sincerely,

Miles E. Locker
Chief Counsel

MEL:bf
cc: Art Lujan, State Labor Commissioner
Rich Clark, Chief Deputy Labor Commissioner
Tom Grogan, Assistant Chief
Roger Miller, Assistant Chief
Greg Rupp, Assistant Chief
Nance Steffen, Assistant Chief
Andrew Baron, Industrial Welfare Commission