Are Unpaid Internships Legal? Tests, State Laws, and Rights

Unpaid internships are legal in the United States, but only under specific conditions. At a private, for-profit company, an unpaid internship is lawful only when the intern, not the employer, is the primary beneficiary of the arrangement. Fail that standard and the intern is legally an employee owed at least the federal minimum wage of $7.25 per hour.¹ Nonprofits and government agencies operate under looser rules, and several states impose stricter ones. Whether your internship is legal depends on which of those categories you’re in and how the day-to-day work actually looks.

The Seven-Factor Test for For-Profit Internships

The Fair Labor Standards Act requires employers to pay employees minimum wage and overtime, but it never defines “intern.”² Courts have filled the gap with the primary beneficiary test, which asks who gets more out of the relationship: the intern or the company. If the company does, the intern is an employee and must be paid. The Department of Labor uses the same framework when it enforces the law.³

Seven factors go into the analysis, and no single one decides the outcome. Judges weigh them together to determine the economic reality of the arrangement. An internship can fall short on a factor or two and still be lawful if the overall picture shows a genuine learning experience rather than free labor.

Expectation of compensation. Both sides must clearly understand the position is unpaid before it begins. A promise of pay, stated or hinted at, pushes the role toward employment.
Training similar to an educational environment. The internship should teach the way a classroom would, including hands-on instruction in industry practices. Filing and errands don’t qualify.
Tie to formal education. Programs linked to coursework or offering academic credit stand on stronger ground. An internship with no connection to the intern’s field of study is harder to defend.
Accommodation of the academic calendar. The schedule should work around school, not the reverse. Requiring work during exams signals the company’s needs come first.³
Limited duration. The internship should last only as long as meaningful training continues. Once the learning stops and the work continues, the arrangement starts to look like unpaid employment.
No displacement of paid workers. Interns should complement paid staff, not replace them. If the intern is doing tasks a paid employee would otherwise handle, the company is the one benefiting.
No guaranteed job at the end. Both sides should understand that finishing the internship doesn’t entitle the intern to a paid position. Otherwise the arrangement resembles a free trial period.

Because the analysis is fact-intensive, employers cannot just check boxes and assume they’re safe. A summer research position at a biotech firm looks nothing like a semester at a fashion magazine, and reasonable people can disagree about whether a specific role passes.³

Nonprofits and Government Agencies Play by Different Rules

The primary beneficiary test doesn’t apply to unpaid roles at nonprofits, public agencies, and government offices. The FLSA allows people to volunteer their time to religious, charitable, civic, or humanitarian organizations without triggering wage requirements. The volunteer must serve freely, for a public-service purpose, and without expecting compensation. Organizations can’t coerce someone into the role, and the work must serve the charitable mission rather than compete directly with for-profit businesses.⁴ Most groups have volunteers sign written agreements acknowledging the unpaid status.

Nonprofits and public agencies can also pay a small stipend without converting a volunteer into an employee, as long as the payment stays “nominal.” Federal regulations say the stipend can’t substitute for actual compensation and can’t rise with the volunteer’s productivity.⁵ There’s no set dollar threshold; regulators look at distance traveled, time committed, and whether the volunteer is on call year-round or only occasionally.

State Laws Can Make an Otherwise Legal Internship Illegal

Federal law is a floor, not a ceiling. An internship that passes the federal primary beneficiary test can still violate state law. Some states apply older tests that require the employer to derive no immediate advantage from the intern’s work, which is a much harder bar than the federal totality-of-the-circumstances approach. Others require the internship to closely replicate a formal educational setting.

State definitions of “employee” can also be broader than the federal one. When they are, an intern who counts as a non-employee under federal law can still be an employee under state law and entitled to the state’s minimum wage, which in many states runs well above $7.25.⁶ State penalties for misclassification can include civil fines, back-pay orders, and attorney’s fees on top of anything the federal government imposes.

Protections Unpaid Interns Often Don’t Have

Even a legal unpaid internship comes with fewer protections than most workers assume. This is the part that catches interns off guard.

Discrimination and Harassment

Title VII of the Civil Rights Act and other federal anti-discrimination laws protect “employees.” Federal courts have consistently held that unpaid interns aren’t employees under these statutes because they receive no significant remuneration. In practical terms, an unpaid intern at a for-profit company who experiences sexual harassment or racial discrimination has no federal cause of action through the EEOC. Some states, including New York, California, Illinois, Oregon, and the District of Columbia, have passed laws extending workplace harassment and discrimination protections to unpaid interns. Elsewhere, the only recourse may be the employer’s internal complaint process, which has no legal enforcement mechanism.

Workers’ Compensation

Coverage varies by state. Paid interns are generally covered by their employer’s workers’ compensation policy. Unpaid interns sit in a gray area: some states extend coverage when the employer controls the intern’s duties and schedule, others exclude unpaid interns entirely. An unpaid intern hurt on the job could face medical bills with no guaranteed reimbursement.

Workplace Safety

OSHA safety standards generally apply to everyone on a job site. An intern can report a health or safety hazard to OSHA, and retaliation for filing a complaint is prohibited regardless of employment classification.

If You Should Have Been Paid

The consequences of misclassification are steep. An employer who violates federal minimum wage or overtime rules owes the affected intern all unpaid wages plus an equal amount in liquidated damages, so a $5,000 wage shortfall can turn into a $10,000 award.⁷ Courts also order the employer to pay the intern’s attorney’s fees and litigation costs, which often exceed the underlying wages. A court can reduce or eliminate liquidated damages if the employer proves it acted in good faith with reasonable grounds to believe the arrangement was legal, but that’s a hard standard to satisfy once a violation has been found.⁸

You don’t have unlimited time. Federal law gives you two years to bring a wage claim, extended to three years if the employer’s violation was willful.⁹ The clock starts when each violation occurs, so every unpaid pay period is its own claim, and waiting forfeits the oldest wages.

To file, contact the Department of Labor’s Wage and Hour Division online or by phone at 1-866-487-9243. The nearest field office will follow up within two business days. Have the employer’s name and address, a description of the work you performed, and details about pay ready.¹⁰ You can also file a private lawsuit under the FLSA, on your own or with other interns as a collective action.⁷

A Note for International Students

If you’re on an F-1 visa, get Curricular Practical Training authorization through your school before starting an unpaid internship. CPT documents that the experience is part of your curriculum and keeps your status intact. It also matters if the role unexpectedly becomes paid: you can’t accept wages without prior authorization, and retroactive pay for unauthorized work is prohibited. Students on J-1 exchange visitor visas face separate rules on hours, field of study, and permitted work. Talk to your school’s international student office before you accept the position. Immigration consequences are more severe than any wage dispute.

1
Worker.gov. Minimum Wage
2
U.S. Department of Labor. Wages and the Fair Labor Standards Act
3
U.S. Department of Labor. Fact Sheet 71 – Internship Programs Under the Fair Labor Standards Act
4
U.S. Department of Labor. Fact Sheet 14A – Non-Profit Organizations and the Fair Labor Standards Act
5
eCFR. 29 CFR 553.106 – Payment of Expenses, Benefits, or Fees
6
U.S. Department of Labor. State Minimum Wage Laws
7
Office of the Law Revision Counsel. 29 U.S. Code 216 – Penalties
8
Office of the Law Revision Counsel. 29 USC 260 – Liquidated Damages
9
Office of the Law Revision Counsel. 29 U.S. Code 255 – Statute of Limitations
10
Worker.gov. Filing a Complaint With the U.S. Department of Labor’s Wage and Hour Division