Well, they’re just like a lot of employers who don’t realize or admit that they are employers.
Mary-Kate and Ashley Olsen were ordered to pay $140,000 to former interns who claimed they were not paid wages for work performed. The case was in Manhattan, but the basics are the same here in California: if someone performs work for you / your company, the default is that they should be paid at least minimum wage (and overtime, and get breaks). Only after a detailed legal analysis should you move to anything other than “pay for time worked.” The “honor” of learning at your feet does not pay for the basics of daily living! Here’s a short article on the claim.
Be careful! “Pay now or pay later” is really “pay the basics now or pay a ton in wages, penalties and attorneys’ fees later.”
California Employment Law Blog 