🧑‍🎓 Hiring Interns: Do You Have to Pay Them? A Legal Guide for Employers

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🧑‍🎓 Hiring Interns: Do You Have to Pay Them? A Legal Guide for Employers

Hiring interns can be a win-win—offering students real-world experience while giving your business fresh energy and ideas. But before you bring on an intern, it’s critical to understand the federal guidelines and state laws that determine whether an internship must be paid or can legally be unpaid.

Here's what every business should know to stay compliant—and protect both your interns and your organization.

⚖️ Federal Guidelines: The “Primary Beneficiary Test”

The U.S. Department of Labor (DOL) uses a “Primary Beneficiary Test” to determine whether an intern is considered an employee under the Fair Labor Standards Act (FLSA). If the intern is legally an employee, they must be paid at least minimum wage.

This test includes seven non-exhaustive factors:

  1. Expectation of no compensation – Both parties understand the internship is unpaid.

  2. Training is educational in nature – Mirrors what the intern would learn in an academic setting.

  3. Tied to formal education – Includes coursework or academic credit.

  4. Aligned with academic calendar – Accommodates class schedules and breaks.

  5. Limited duration – Lasts only as long as beneficial learning is occurring.

  6. Intern’s work doesn’t replace paid employees – The intern is not doing the job of a staff member.

  7. Mutual understanding of no job guarantee – No promise of employment at the end.

🔍 What does "non-exhaustive" mean? This means the list is not complete or definitive. Courts and regulators may consider other relevant factors when determining who benefits more—the intern or the employer. No single factor controls the outcome.

If the internship primarily benefits the intern, it can be unpaid. If it benefits the employer, it's considered employment—and must be paid.

👉 Tip: All 7 factors are considered together. No single factor controls the outcome.

💸 When Internships Must Be Paid

You must pay your intern at least minimum wage and overtime if:

  • They’re performing productive work (answering phones, making sales, etc.)

  • You are receiving a direct benefit from their labor

  • There is no formal educational component or credit agreement in place

🌴 Florida-Specific Guidelines

While Florida follows the federal Primary Beneficiary Test, there are additional points to consider:

  • Florida does not have separate laws governing internships, so DOL guidance applies.

  • However, if the intern is considered an employee, they must be paid Florida’s minimum wage, not the federal rate.

🗽 Other State-Specific Laws

Some states have stricter rules than federal law. A few examples:

California

  • Unpaid internships must have academic value

  • Must not displace employees

  • Strongly favors compensation unless educational structure is clear

New York

  • Requires 11-point compliance test for unpaid internships

  • Educational benefit must outweigh employer benefit

Massachusetts, Oregon, Illinois

  • Follow DOL rules closely but emphasize formal training and documentation

✅ Always check with your state’s Department of Labor before structuring unpaid internships.

📝 How to Structure a Legal Unpaid Internship

If you decide to move forward with an unpaid internship, make sure to:

  • Sign a written agreement outlining the unpaid status and learning goals

  • Partner with an educational institution or have academic credit assigned

  • Limit tasks to training and shadowing

  • Provide feedback, mentorship, and learning objectives

  • Avoid replacing paid roles with unpaid interns

🚫 Common Mistake: Just calling someone an “intern” isn’t enough. If they’re doing real work with no educational tie-in, they must be paid.

🚨 Risks of Getting It Wrong

Misclassifying interns can lead to:

  • Back wages + overtime claims

  • Penalties and fines

  • Legal fees and lawsuits

  • Damage to your employer brand

✅ Call to Action: Audit Before You Hire

Not sure if your internship program is compliant?
📞 Book a 30-minute HR consult to review your current internship plans
📧 Contact us at BizCoachGurus@gmail.com for help structuring internships the right way

💬 Final Thought

Interns are future leaders. Treat them like learners, not free labor. Staying compliant not only protects your business—it shows that you value growth, fairness, and responsible hiring.

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