Unpaid Intern – Are You Sure?
By VICKY BROWN
Internships can be a powerful tool for growing your team, nurturing future talent, and giving back to your industry—but if you’re not careful, they can also turn into a legal minefield. For small business owners, especially those new to leadership, it’s easy to overlook the rules that govern internships. But overlooking those rules can cost you—financially and reputationally.
One of the biggest misconceptions out there is the idea that interns are free labor. That’s simply not true. If someone is doing work for your business—even if they’re just “helping out”—you may be legally required to treat them like an employee. That means paying them at least minimum wage, tracking their hours, onboarding them properly, and making sure they’re covered under workers’ comp.
The Department of Labor uses what’s known as the “primary beneficiary test” to determine if an intern can legally be unpaid. In plain terms, the internship must benefit the intern more than the business. So if your intern is doing tasks like filing, posting to social media, or responding to customer emails, that’s real work—and they need to be paid.
“…unpaid internships may not pass muster unless they’re part of a verified academic program“
If you do want to offer an unpaid internship, there are strict conditions that must be met. The experience has to be educational in nature, more like a training program than a job. It should reflect a classroom-style learning environment, with mentorship, feedback, and structure. There should be a clear beginning and end date, and no expectation of future employment. And most importantly, both you and the intern need to agree in writing that the internship is unpaid.
In California and many other states with strict labor laws, even these unpaid internships may not pass muster unless they’re part of a verified academic program. That’s why getting documentation from a college or university is critical if you’re relying on the “academic credit” route.
The simpler—and safer—option for most businesses is to offer paid internships. Paid interns should be treated just like any other short-term employee. That includes collecting a W-4, running payroll, providing legally required notices, tracking time and breaks, and covering them under your workers’ comp policy. You can set specific start and end dates and limit the number of hours to stay compliant with wage and hour laws.
Whether you’re an entrepreneur jumping into a leadership role, a seasoned business pro with new HR responsibilities, or just starting your HR career – we’ve got the right path to guide you through your HR hurdles.
Check out the Leaders Journey Experience. This online education platform holds the LJE Masterclass, HR SimpleStart Academy and HR FuturePro Academy.
Not sure where to start – take the quiz!
Regardless of whether your internship is paid or unpaid, you’ll also need clear documentation. A written internship offer letter should outline the role, expectations, whether the internship is paid or unpaid, and the timeframe. You should also keep records of their hours, any feedback or evaluations, and any relevant school documentation.
And don’t forget about insurance. Check with your provider to ensure that interns—especially unpaid ones—are covered under your general liability and workers’ comp policies. It’s better to know now than to find out too late.
A well-structured internship program doesn’t just keep you compliant—it builds your reputation as a business that develops people. Interns will talk about their experience. They’ll post online. They’ll share with peers. Done right, an internship can be a powerful branding tool and a great way to find your next amazing hire.
So if you’re thinking of starting an internship program—or if you’ve already got one but haven’t looked at the compliance side in a while—now’s the time. Tighten things up. Put the right systems in place. And turn your internship program into something that’s good for your business, good for your interns, and fully above board.
Spread the word
MORE HUMAN, MORE RESOURCES
310.308.7680 option 1
hello@idomeneoinc.com