Overview
Unpaid internships can offer valuable learning opportunities for students while giving businesses a chance to observe potential hires. However, employers must structure internships carefully to avoid violating wage and hour laws and to protect both the organization and the intern.
This guide summarizes the Department of Labor’s six-point approach for unpaid internships, explains common coverage and liability concerns, and suggests practical next steps for employers and schools.
Key takeaways
- Unpaid internships are lawful only when the primary benefit is educational and the intern is not replacing paid staff.
- Clear written expectations and supervision reduce the risk of wage claims and misunderstandings.
- Review program design against federal and state rules and consider liability and insurance implications before starting.
How it works
The federal six-point test helps determine whether an internship qualifies as unpaid. Meeting these criteria reduces the likelihood that wage-and-hour laws will apply.
- The internship provides training similar to an educational classroom experience.
- The experience is structured to benefit the intern’s education and career readiness.
- The intern does not displace regular employees and works under staff supervision.
- There is no obligation to hire the intern when the program ends.
- Both parties understand that the internship is unpaid.
- The employer receives no immediate advantage from the intern’s work; the arrangement prioritizes learning.
If an internship fails to meet these factors, it may be treated as employment for minimum wage and overtime purposes, and wage claims or school challenges could follow.
What it may cover (and what it may not)
An unpaid internship typically covers supervised learning tasks, exposure to workplace processes, and mentorship rather than regular billable work. It should not include routine tasks that a paid employee would normally perform on an ongoing basis.
Employers should also consider how their program affects liability and insurance needs; for guidance on general liability issues consult resources such as Overview: Insurance and liability issues before finalizing program details.
Common mistakes to avoid
Failing to document the educational goals and daily responsibilities is a frequent error that leads to disputes. Vague role descriptions make it difficult to demonstrate the program’s educational intent.
Another common mistake is relying on interns to perform work that should be handled by paid staff, which can trigger wage claims. Inadequate supervision or assigning business-critical tasks to unpaid interns increases legal and safety exposure.
Questions to ask an agent
When assessing risk, ask about insurance coverage for nonemployees and whether existing policies extend to interns. If you need a focused discussion, consider reaching out to an insurance professional to talk to an agent.
You may also want to ask about workplace liability limits, required endorsements, and whether the carrier recognizes unpaid interns under the policy.
Next steps
Review your internship descriptions, learning objectives, and supervision plans to ensure they emphasize education over labor. Put expectations in writing for both the intern and supervisors.
For a broader look at liability and how it can affect small programs, see resources like Understanding Liability and Insurance in Various Contexts and discuss program design with human resources or counsel when appropriate.
Finally, confirm your program complies with any applicable state laws and document the educational content and evaluations so the learning focus is clear.
Frequently Asked Questions
Can an unpaid internship be offered for academic credit?
Yes, academic credit is often used, but the internship must still meet the educational-focused criteria to avoid being classified as paid employment.
What happens if an intern performs the same duties as a paid employee?
If an intern replaces or performs the same ongoing duties as regular staff, wage-and-hour protections may apply and the position could be treated as employment.
Do unpaid interns need to be covered under the company’s insurance?
Coverage varies by policy; employers should confirm with their insurer whether interns are included and consider endorsements for nonemployee liability if needed.
How should employers document an unpaid internship?
Keep written learning objectives, a schedule of activities, supervision notes, and a clearly signed agreement stating that the position is unpaid and educational.
When should I consult an attorney about my internship program?
Consult counsel if you’re unsure whether the program meets labor standards, if you plan to use interns for substantial business work, or if you face a wage complaint.