An unpaid internship at a for-profit company in the U.S. is legal only if the intern, not the employer, is the "primary beneficiary" of the arrangement. The Department of Labor weighs seven factors, including whether the work is tied to your education, provides real training, and does not replace paid staff. If you are doing a paid employee's job, you are likely owed pay.
You finally get an offer, and then you read the fine print: unpaid. Suddenly you're doing math on rent, groceries and whether you can afford to work for free all summer, while also wondering if it's even allowed.
Fair question. The short answer is: sometimes. Whether an unpaid internship is legal comes down to who benefits more from it, you or the company. If the company benefits more, it generally has to pay you.
Quick note before we get into it: this is a plain-language summary, not legal advice. The rules below are federal, and your state may have stricter ones.
The rule: who's the "primary beneficiary"?
Under the federal Fair Labor Standards Act, people who work for a for-profit company are generally employees who have to be paid at least minimum wage. Interns can be an exception, but only when the internship is really built around your education rather than the company getting work out of you.
The U.S. Department of Labor's Wage and Hour Division calls this the primary beneficiary test. It's laid out in its Fact Sheet #71, Internship Programs Under the Fair Labor Standards Act.
The seven factors
The Department of Labor looks at the whole setup and weighs these factors. No single one decides it.
- Expectation of pay. Do you and the employer clearly understand there's no expectation of compensation? Any promise of pay, even implied, points toward employment.
- Training like school. Does it give you training similar to what you'd get in an educational setting, including hands-on training?
- Tied to your education. Is it connected to your formal education program, through coursework or academic credit?
- Fits your academic calendar. Does it work around your school commitments?
- Only as long as you're learning. Does it last only as long as it's actually teaching you something?
- Complements, doesn't replace. Does your work add to what paid employees do, rather than replacing them, while giving you real educational value?
- No promised job. Do you both understand there's no guaranteed paid job at the end?
The more these point toward your education and away from the company getting free labor, the more likely an unpaid internship is legal.
Nonprofits and government are different
The primary beneficiary test is about for-profit companies. Nonprofits and government agencies are generally allowed to have volunteers for charitable or public-service work, so unpaid roles there are treated differently. That doesn't mean anything goes, but the rules aren't the same.
Red flags
- You're doing the same work as a paid employee, on the same schedule.
- You were brought in to cover a busy season or someone who left.
- There's barely any supervision or training. You're just producing work.
- The "internship" has no real end date tied to learning.
- You're told a paid job depends on working for free first.
Questions worth asking before you say yes
It can feel awkward to ask. It's completely normal, and any decent employer will answer.
- What will I be learning, and who'll be training me?
- Is this connected to academic credit, and can you work with my school on it?
- How many hours a week, and for how long?
- Is there a stipend, travel allowance or housing allowance, even without a salary?
Can you actually afford it?
Even when an unpaid internship is legal, it might not be realistic, and that's a completely valid reason to pass. Paid internships are common, especially in software, finance, engineering and data. A lot of employers now put the pay right in the listing, and several states, including California, Colorado, New York and Washington, require a pay range in job postings. You can browse only the internships that state their pay.
Source: U.S. Department of Labor, Wage and Hour Division, Fact Sheet #71, "Internship Programs Under the Fair Labor Standards Act." State laws may impose additional requirements. This article is general information, not legal advice.