Unpaid internships occupy an odd space: they are common, often genuinely valuable, and sometimes plainly a way to get labour without paying for it. The Fair Labor Standards Act requires for-profit employers to pay employees, so the legal question is whether an intern counts as an employee. The Department of Labor answers that with the primary beneficiary test.
The primary beneficiary test
The test asks who is the primary beneficiary of the arrangement: the intern, or the employer. DOL describes it as flexible, with no single factor being determinative, and it depends on the unique circumstances of each case. The factors courts have identified include the extent to which both sides clearly understand there is no expectation of compensation; whether the internship provides training similar to an educational environment; whether it is tied to a formal education programme or academic credit; whether it accommodates academic commitments and corresponds to the academic calendar; whether its duration is limited to the period of useful learning; whether the intern's work complements rather than displaces the work of paid employees; and whether both sides understand there is no entitlement to a paid job at the end.
DOL adopted this test in 2018, replacing an earlier six-part test that appellate courts had rejected.
The displacement factor is usually the giveaway
In practice, the factor that most often decides how an arrangement looks is whether the intern is doing work that would otherwise be done by a paid employee. An intern shadowing, learning, and producing work that is reviewed as a teaching exercise looks like an intern. An intern covering shifts, staffing a desk, or handling a workload that vanished when a paid role was not filled looks like an employee who is not being paid.
If an internship is really the second kind, the remedy is not that it becomes illegal to have done — it is that the person may be owed wages, including minimum wage and overtime, and the Wage and Hour Division can investigate.
Non-profits and public agencies are treated differently
DOL guidance notes that unpaid internships for public sector and non-profit charitable organizations, where the intern volunteers without expectation of compensation, are generally permissible. That is why so many unpaid roles sit at non-profits and government offices, and it is a real legal distinction rather than a loophole.
Separately, a minor doing an internship is still a minor for child-labor purposes: the hours limits and the hazardous occupations rules covered in our other work articles apply to an intern the same as to any other young worker, paid or not.
Remember this
- DOL uses a flexible primary beneficiary test to decide whether a for-profit intern is really an employee who must be paid.
- No single factor decides it; the analysis depends on the circumstances of each case.
- Whether the intern displaces paid employees is usually the most telling factor.
- Unpaid internships at public sector and non-profit charities are generally permissible, and child-labor rules still apply to interns.
Sources
This article provides general educational information, not individualized legal advice. KidsKnowRights is not a law firm, and reading this article does not create an attorney-client relationship. Laws vary by state, age, and circumstances, and they change over time. For advice about a real situation, talk with a licensed attorney or a legal aid organization.