Do You Get Paid for Internships: Legal Rules and Exceptions

Whether you get paid for an internship depends mostly on who is hosting it. At a for-profit company, the default answer is yes: federal law treats interns who do productive work as employees entitled to at least the $7.25 federal minimum wage, and often more under state law.¹ An unpaid internship at a for-profit business is legal only when you, rather than the employer, are the primary beneficiary of the arrangement. Nonprofits and government agencies have more room to host unpaid interns under volunteer rules, though limits still apply.

When a For-Profit Internship Must Be Paid

The Fair Labor Standards Act requires every for-profit employer to pay workers classified as employees at least $7.25 per hour. Work more than 40 hours in a week and the employer owes overtime at one and a half times your regular rate.¹ Many states set a higher minimum, ranging from $7.25 to over $16 per hour, and the employer must pay whichever rate is higher.²

A company cannot dodge these requirements by calling the position an “internship.” If you perform work that benefits the business, you are generally an employee, not a trainee, and you are owed wages. Employers who violate the rules can be held liable for all unpaid wages plus an equal amount in liquidated damages, effectively doubling what you are owed.³

The Primary Beneficiary Test

Courts decide whether someone labeled an intern is actually an employee by applying the “primary beneficiary test.” It examines the overall economic reality of the relationship to identify who benefits more. The test is deliberately flexible, and no single factor controls the outcome.⁴ Courts weigh seven factors:

Both sides clearly understand the position is uncompensated. Any promise of payment, even an implied one, points toward an employment relationship.
The internship provides hands-on training similar to what you would get in a classroom or clinical setting.
The internship connects to your degree program through integrated coursework or academic credit.
The employer works around your academic calendar rather than treating you like a full-time staffer.
The internship lasts only as long as the learning period, not indefinitely.
Your work supplements what employees do rather than replacing a position the company would otherwise fill.
Both sides understand the internship does not automatically lead to a paid job.

An internship can still be legally unpaid if one or two factors lean toward employment, as long as the overall balance favors you as the primary beneficiary.⁵

Academic Credit Is Not Required

A common misconception is that an unpaid internship is legal only if you receive college credit. Academic credit is one factor courts weigh, not a requirement. An internship could be lawfully unpaid without a formal academic connection if the other factors weigh heavily in your favor.⁴ A connection to your school’s curriculum does strengthen the case that the arrangement is genuinely educational.

When Unpaid Is Allowed: Nonprofits and Government Agencies

The rules loosen when the host is a public agency or a nonprofit. Federal regulations allow individuals to volunteer for public agencies for civic, charitable, or humanitarian reasons without triggering minimum wage and overtime requirements, as long as the person serves freely and without any promise or expectation of pay.⁶

Nonprofits have similar latitude to accept volunteer services for religious, charitable, or humanitarian purposes. The flexibility has limits, though. Volunteers at a nonprofit generally cannot work in commercial operations the organization runs, such as a gift shop or a revenue-generating business unit. Paid employees of the nonprofit also cannot “volunteer” to perform the same type of work they are already paid to do.⁷ If you are doing the same job as paid staff on what amounts to a regular work schedule, the organization may still owe you wages.

State Rules Can Be Stricter

Federal law sets a floor. Some states require the intern to be the exclusive beneficiary of the arrangement, add their own multi-factor tests on top of the federal criteria, or require written notice that the position is unpaid. State labor agencies also vary in how aggressively they enforce these rules. Check your state labor department’s guidelines before accepting or offering an unpaid internship.

Workers’ compensation coverage varies too. Some states require employers to carry workers’ compensation insurance for all interns, paid or unpaid, while others exclude unpaid interns or treat them differently depending on the type of employer. If you are injured during an unpaid internship, your ability to receive benefits depends on where you work and the specific terms of your state’s workers’ compensation statute.

Harassment and Discrimination Protections

Being unpaid can leave a gap in workplace protections. Federal anti-discrimination laws like Title VII of the Civil Rights Act generally protect “employees,” and most courts have held that unpaid interns do not qualify unless they receive significant compensation such as a pension, insurance, or similar benefits. Academic credit and general work experience typically do not count.⁸ An unpaid intern who experiences harassment or discrimination at a for-profit company may have no federal remedy.

Several states have stepped in. California, New York, Oregon, and a growing number of others have amended their anti-discrimination and anti-harassment laws to cover unpaid interns explicitly, giving them the same protections as paid employees. If you face harassment during an unpaid internship, your state’s human rights or civil rights agency is the best place to start.

Taxes on Paid Internship Income

Paid internship wages are taxable, and how the employer reports them depends on your classification. As an employee, the typical arrangement, you receive a W-2 showing wages and taxes withheld. If you are classified as an independent contractor, the company reports your pay on a 1099-NEC when it totals $2,000 or more during the year.⁹

Most employees pay Social Security and Medicare taxes (FICA) on their wages. If you work for the same school, college, or university where you are enrolled at least half-time, and your job relates to your course of study, your wages are exempt from FICA.¹⁰ The exemption does not apply to off-campus jobs or internships with outside employers, even when you receive academic credit.

Stipends, meaning flat payments not tied to hours worked, are also taxable. The IRS treats taxable stipends similarly to scholarship and fellowship income, and you may need to report them as earned income on your tax return even if no taxes were withheld. Set aside a portion for taxes and confirm whether the payer will issue a W-2 or a 1099.

Extra Rules for International Students

International students on F-1 or J-1 visas face additional requirements before starting any internship, paid or unpaid.

F-1 Students and Curricular Practical Training

F-1 students can work in internships through Curricular Practical Training (CPT), which covers any required internship or practicum offered by employers through cooperative agreements with the school. CPT must be an integral part of your established curriculum. You do not file a separate application with USCIS, but your school’s Designated School Official must authorize CPT on your Form I-20 before you start working.¹¹

You generally must have completed one full academic year of study and be enrolled full-time at an approved school. Graduate students whose programs require immediate practical training may be exempt from the one-year waiting period. One consequence to watch: using 12 months or more of full-time CPT makes you ineligible for Optional Practical Training (OPT) at the same education level after graduation.¹¹

J-1 Intern Program

The J-1 Intern program is a separate exchange visitor category for foreign nationals either currently enrolled in a post-secondary institution outside the United States or who graduated within the past 12 months.¹² Participants must work through an approved sponsoring organization, and programs longer than six months require a midpoint evaluation in addition to a final evaluation. Start the sponsorship process well in advance, since placement and visa processing take time.

What to Do If You Should Have Been Paid

If you believe a for-profit employer is illegally treating you as an unpaid intern, you have two main paths to recover wages: an administrative complaint or a private lawsuit.

Filing a Complaint With the Department of Labor

You can file a complaint with the Wage and Hour Division online or by calling 1-866-487-9243.¹³ Complaints are confidential. If an investigation finds a violation, the agency will seek payment of the full amount of back wages owed to you.¹⁴ Employers who repeatedly or willfully violate minimum wage or overtime rules can also face civil money penalties of up to $2,515 per violation.¹⁵

Filing a Private Lawsuit

You also have the right to sue in federal or state court. If you win, the employer owes your unpaid wages plus an equal amount in liquidated damages, effectively doubling your recovery. The court can also order the employer to pay your attorney’s fees and costs.³

Deadlines and Retaliation

You generally have two years from the date of the violation to file a claim. If the employer’s violation was willful, meaning they knew or showed reckless disregard for whether their conduct violated the law, the deadline extends to three years.¹⁶ Waiting too long means losing the right to recover wages entirely.

Federal law prohibits an employer from firing you or retaliating against you for filing a wage complaint, participating in an investigation, or testifying in a proceeding.¹⁷ If the employer retaliates, you may be entitled to reinstatement, lost wages, and additional liquidated damages.³

1
U.S. Department of Labor. Handy Reference Guide to the Fair Labor Standards Act
2
U.S. Department of Labor. State Minimum Wage Laws
3
Office of the Law Revision Counsel. 29 U.S. Code 216 – Penalties
4
U.S. Department of Labor. Fact Sheet 71 – Internship Programs Under the Fair Labor Standards Act
5
U.S. Department of Labor Wage and Hour Division. Field Assistance Bulletin No. 2018-2 – Determining Whether Interns at For-Profit Employers Are Employees Under the FLSA
6
eCFR. 29 CFR Part 553 Subpart B – Volunteers
7
U.S. Department of Labor. Fact Sheet 14A – Non-Profit Organizations and the Fair Labor Standards Act
8
U.S. Equal Employment Opportunity Commission. EEOC Informal Discussion Letter
9
Internal Revenue Service. Form 1099 NEC and Independent Contractors
10
Internal Revenue Service. Foreign Student Liability for Social Security and Medicare Taxes
11
U.S. Citizenship and Immigration Services. Chapter 5 – Practical Training
12
BridgeUSAPrograms. Intern
13
U.S. Department of Labor. How to File a Complaint
14
Worker.gov. Filing a Complaint With the U.S. Department of Labor Wage and Hour Division
15
U.S. Department of Labor. Civil Money Penalty Inflation Adjustments
16
Office of the Law Revision Counsel. 29 USC 255 – Statute of Limitations
17
Office of the Law Revision Counsel. 29 U.S. Code 215 – Prohibited Acts