Unpaid Internships: The Legal Guide You Need to Read

Are You an Intern or Just Free Labor? Let’s Talk.

You landed the internship. High-fives all around! It’s in your dream industry, the company looks amazing on a resume, and it feels like the first real step into your career. There’s just one tiny catch… it’s unpaid. And suddenly, the excitement is mixed with a nagging question: Is this even legal? It’s a question that trips up countless students and career-changers every year. The line between a valuable learning experience and straight-up exploitation can be incredibly thin. This isn’t just about feeling valued; it’s about understanding the complex legal framework surrounding internships and unpaid labor in the United States.

The whole concept can feel like a gray area, intentionally murky at times. Companies get eager assistants, and interns get a foot in the door. Win-win, right? Not always. The U.S. Department of Labor (DOL) has some pretty specific things to say about when a company can bring you on board without paying you a dime. If those conditions aren’t met, you’re not an intern; you’re an employee who is legally entitled to minimum wage and overtime pay. Knowing the difference is your best defense against being taken advantage of. So, let’s pull back the curtain and figure out where your internship stands.

Key Takeaways

• The legality of an unpaid internship hinges on the “primary beneficiary test”. If the intern is the main one benefiting (through education and training), it’s more likely to be legal. If the employer is the main beneficiary, it’s not.
• The Department of Labor (DOL) uses a 7-factor test to determine who the primary beneficiary is. No single factor is decisive.
• A legal unpaid internship must provide training similar to what you’d get in an educational setting. It can’t just be free work that a regular employee would do.
• Interns cannot displace regular employees. If you’re doing the work of someone who was fired or who the company decided not to hire, that’s a massive red flag.
• Just because you agree to an unpaid internship doesn’t make it legal. Your rights under the Fair Labor Standards Act (FLSA) cannot be waived.

The Big Question: Are Unpaid Internships Actually Legal?

Yes, but with some very big ‘ifs’. The foundational law here is the Fair Labor Standards Act (FLSA). It’s the federal law that establishes minimum wage, overtime pay, recordkeeping, and youth employment standards. In the eyes of the FLSA, most people who work for a for-profit company are employees, and employees have to be paid. Simple.

So, how do unpaid interns fit in? For a long time, the rules were rigid and confusing. But in 2018, the Department of Labor simplified things by officially adopting the “primary beneficiary test.” This is the new gold standard. It’s a more flexible approach that asks a simple, central question: Who benefits more from the arrangement, the intern or the employer?

If the answer is the intern, the company probably doesn’t have to pay you. If the answer is the employer, then you’re likely an employee and are owed wages. To figure this out, the DOL and the courts look at a set of seven factors. It’s not a checklist where you need to tick off four out of seven. It’s a holistic view of the “economic reality” of the relationship. Let’s break them down one by one.

The “Primary Beneficiary Test”: Your Legal Guide to Unpaid Labor

This seven-factor test is the heart of the matter. Understanding these points will empower you to analyze your own situation and determine if your internship is a legitimate learning opportunity or a case of illegal unpaid labor.

Factor 1: The Expectation of Compensation

This one seems obvious, but it’s an important starting point. Is it clearly stated and understood by both you and the employer that this is an unpaid position? If the internship is advertised as unpaid and you accept it on those terms, this factor weighs in favor of it being a legal internship. However, this is by no means a get-out-of-jail-free card for the employer. You can’t sign away your right to be paid if the rest of the factors show you’re really an employee. A promise of compensation, even if it’s implied, would strongly suggest an employment relationship.

Factor 2: Training Similar to an Educational Environment

This is a huge one. Does the internship provide you with hands-on training that’s similar to what you would receive in a classroom or a vocational school? Think of it like a lab for your career. You should be learning new skills, operating under supervision, and working on projects that are designed to teach you something. If your daily routine consists of getting coffee, making copies, answering phones, and running errands—tasks that require no specialized training and primarily benefit the company’s operations—you’re not being trained. You’re just working for free.

Factor 3: Connection to a Formal Education Program

Is the internship tied to your formal education? This could mean it’s part of a school program where you earn academic credit, or it corresponds with a specific course of study. When a university integrates an internship into its curriculum, it gives the position a strong educational stamp of approval. While receiving academic credit isn’t a strict requirement, its presence heavily supports the argument that the intern is the primary beneficiary.

Factor 4: Accommodation of Academic Commitments

A legitimate internship should work around your academic calendar. Does the internship’s duration and schedule respect your coursework, exam periods, and other school-related obligations? If the company is demanding you prioritize the internship over your classes, it suggests they view you more as a member of their workforce than as a student they are helping to educate.

Factor 5: Limited Duration

The internship should be for a fixed, limited period. It should last only as long as it takes for you, the intern, to benefit from the learning experience. An internship that is open-ended, or that lasts for a very long time without a clear educational arc, starts to look a lot like a permanent job without the pay. The duration should make sense for the learning objectives.

Factor 6: Displacing Regular Employees

This is a critical, bright-red line. Does your work supplement the work of paid staff, or does it displace it? You should be shadowing employees and assisting them in a supervised capacity, not doing their job for them. If a company fires a graphic designer and brings in an “unpaid graphic design intern” to do the exact same work, that is a classic case of illegal unpaid labor. You are there to learn, not to save the company money on payroll.

Factor 7: No Entitlement to a Paid Job

Both you and the employer should understand that completing the internship does not entitle you to a paid job at the end. The internship should be a self-contained learning experience. If it’s being used as a trial period for employment—a way for the company to “try before they buy” without paying for the trial—it crosses the line into an employment relationship.

Remember, no single factor is the deciding one. A judge would look at the entire situation to see what the ‘economic reality’ of the relationship is. It’s about the big picture.

Putting It All Together: Real-World Scenarios

Let’s see how this test works in practice.

Scenario A: The Legal Internship

Maria is a marketing student. She takes a one-semester, unpaid internship at a digital marketing agency for which she’ll receive 3 course credits. Her supervisor creates a learning plan for her. She spends her time shadowing the social media manager, learning how to use analytics software under direct supervision, participating in brainstorming sessions, and completing a mock campaign strategy as her final project. Her work supplements the team’s efforts but doesn’t replace anyone. She works a flexible 15 hours a week, scheduled around her classes. It is understood that there is no job waiting for her at the end. Verdict: This almost certainly passes the primary beneficiary test. The experience is clearly structured for Maria’s educational benefit.

Scenario B: The Illegal Unpaid Job

David wants to get into event planning. He accepts an unpaid “internship” at a busy event company for the summer. There’s no connection to a school program. He works 40 hours a week, doing the same work as the paid junior coordinators: setting up for events, managing guest lists, answering client emails, and doing administrative tasks. He receives very little supervision or formal training. The company recently let a part-time assistant go and gave David most of their duties. Verdict: This is a major problem. David is clearly the one providing the primary benefit to the employer. He has replaced a paid employee, he is not receiving structured training, and his work is essential to the company’s daily operations. David is an employee and should be getting paid.

Red Flags: When Your “Internship” Looks a Lot Like a Job

Trust your gut. If something feels off, it probably is. Here are some common warning signs that your internship might be crossing a legal line:

• You’re doing more grunt work than learning. If your days are filled with menial tasks that don’t build skills in your chosen field, you’re not an intern.
• There’s no mentorship or supervision. You’re thrown into the deep end and expected to figure things out on your own. A real internship involves guidance.
• You are expected to be as productive as a regular employee. The focus is on what you can produce for the company, not what you can learn.
• You work a rigid, full-time schedule. Especially if it conflicts with educational commitments.
• You hear things like, “This is how you pay your dues.” This phrase is often used to justify exploitation.
• The company is tiny and relies on a constant rotation of unpaid interns to do core business functions.

What to Do If You Think Your Internship is Illegal

Realizing you might be in an exploitative situation is stressful. But you have options. Here’s a step-by-step approach.

Step 1: Document Everything

Keep a detailed log. Write down your daily tasks, the hours you work, any instructions you receive, and who you report to. Save emails, project descriptions, and any other evidence that shows the nature of your work. The more specific you are, the stronger your case will be.

Step 2: Understand Your State’s Laws

The FLSA is the federal floor, but your state might have even stronger protections for interns and workers. Do a quick search for your state’s Department of Labor to see if there are different or additional criteria that apply to you.

Step 3: Speak Up (Carefully)

This can be intimidating. If you feel comfortable, you could try having a conversation with your supervisor or the HR department. Frame it as a desire for more structured learning. You could say something like, “I’m really eager to learn more about [specific skill]. Could I spend some time shadowing someone on that team or receive some more direct training on it?” This can sometimes prompt a change without creating a major conflict.

Step 4: Filing a Complaint

If the situation doesn’t improve or if you’re not comfortable speaking up, you can file a wage complaint with the U.S. Department of Labor’s Wage and Hour Division (WHD). You can also file a complaint with your state’s labor department. They will investigate your claim. It is illegal for an employer to fire or retaliate against you for filing a complaint. If you win your case, you could be entitled to back pay for all the hours you worked, plus an equal amount in liquidated damages.

A Note for Employers: How to Create a Legal Program

If you’re an employer looking to start an internship program, the key is to be intentional. Don’t think of it as a source of free labor. Think of it as a teaching opportunity. Design a structured program with clear learning objectives. Assign a dedicated mentor. Ensure the intern’s work is supervised and provides them with skills they can use elsewhere. And above all, make sure your existing staff isn’t just offloading their least desirable tasks onto the intern. A well-run, legal internship program can be a fantastic way to mentor the next generation of talent, but it has to be done right.

Conclusion

Internships can be an incredible launchpad for a career. A good one will teach you, challenge you, and connect you with people in your field. But the promise of “experience” should never be a cover for exploitation. The law is clear: if you are working for a for-profit company and the company is getting the primary benefit of that work, you are an employee. And employees deserve to be paid. By understanding the 7-factor test and knowing your rights, you can ensure that your internship experience is one that truly serves you—not just your employer’s bottom line.

FAQ

Does receiving a small stipend or travel reimbursement make my unpaid internship legal?

Not necessarily. A small stipend, a lunch allowance, or travel reimbursement doesn’t automatically satisfy the requirements of the FLSA. While it’s a nice gesture, if the 7-factor test still points to you being an employee, you are entitled to the full federal minimum wage for all hours worked. The stipend can be counted toward that amount, but it rarely covers the full wage you’d be owed.

What’s the difference between an unpaid intern and a volunteer?

This is a key distinction. Volunteering is generally reserved for non-profit, charitable, and public sector organizations. You can’t legally “volunteer” for a for-profit company like a marketing agency or a tech startup. The FLSA makes a clear distinction between volunteering for public service or humanitarian reasons and working for a commercial enterprise. If the company you’re interning for is for-profit, the volunteer argument doesn’t apply, and they must follow the primary beneficiary test.

Can I be an unpaid intern if I’m not a student?

Yes, you don’t have to be a student to be a legal unpaid intern, but it makes it much harder for the employer to pass the primary beneficiary test. Factors like connection to a formal education program and accommodating an academic schedule are designed with students in mind. If you’re not a student, the employer has a much higher burden to prove that the internship is solely for your benefit and provides unique, structured training that you couldn’t get in a normal job.