Are unpaid internships legal? The rules for employers in 2026

Unpaid internships are legal at a for-profit company only when the intern, not the company, is the "primary beneficiary" of the arrangement. The US Department of Labor's Fact Sheet #71, updated in January 2018, lists seven factors courts use to decide this, starting with whether both sides understand there is no pay and whether the internship is tied to formal education. If the intern is in substance an employee, the Fair Labor Standards Act requires at least the minimum wage and overtime. Unpaid internships at nonprofits and in the public sector are generally permissible, and some states, New York in particular, apply stricter tests. This is the position as of October 2026.

This page is about pay. For how to interview and score intern candidates, see our interview guide for internships.

What are the seven factors in the primary beneficiary test?

According to DOL Fact Sheet #71, courts look at "the extent to which":

The DOL adds that courts describe the test as "a flexible test, and no single factor is determinative." The answer depends on the whole arrangement, which is why the same intern title can be lawful in one company and unlawful in another.

Where did the test come from?

The Supreme Court held in Walling v. Portland Terminal Co., 330 U.S. 148 (1947), that someone who works for their own advantage without any compensation agreement is not automatically an employee. For decades the DOL distilled that case into a six-part test under which an unpaid trainee had to meet every criterion. In Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528 (2d Cir. 2016), interns on the film Black Swan and at Fox's New York offices sued for wages. One, Eric Glatt, was in a non-degree program that gave no credit for the internship and worked roughly 9 a.m. to 7 p.m., five days a week, in the production accounting department, copying, filing and tracking purchase orders. The Second Circuit declined "DOL's invitation to defer" to its six-part test, adopted the primary beneficiary test with the factors above, vacated the lower court's rulings and sent the case back.

The Eleventh Circuit (Schumann v. Collier Anesthesia, 2015) and Ninth Circuit (Benjamin v. B & H Education, 2017) took the same approach, and in January 2018 the DOL replaced its six-part test with the primary beneficiary test in Fact Sheet #71, citing those cases. State agencies did not all follow.

How does the test apply to real programs?

These are illustrations of how the factors weigh, not legal conclusions:

• Summer marketing "intern" at a for-profit agency. Forty hours a week running client social accounts, no school involvement, no training plan, and the agency would otherwise hire a temp. Factors 2, 3, 4 and 6 point to employment; pay at least minimum wage.
• Semester practicum for credit. A university places a design student for 12 hours a week during term; the school sets learning goals and grades the work, and the student shadows staff on a defined project. Factors 2 to 6 point toward an unpaid internship, though the program still has to keep to that design in practice.
• "Unpaid trial week" for a job candidate. The person does the job to show they can, with a hire in view. Factor 7 points the wrong way, nothing ties it to education, and New York's Department of Labor says interns "placed with the employer for a trial period, with the expectation that afterwards they will be hired as permanent employees, would generally be considered employees." Pay for trial work.
• Volunteer at a food bank. Covered by the nonprofit volunteer exception below, provided the person volunteers without expecting pay.

Does academic credit make an internship unpaid?

No. Credit is part of factor 3, one of seven, and "no single factor is determinative." In Glatt the court's factor list speaks of "integrated coursework or the receipt of academic credit," and the program still has to be designed around the intern's learning. New York's Department of Labor says that if a school gives credit, "it is considered some evidence of the beneficial nature of the program," not proof, and adds that "there is no prohibition on being paid while also receiving academic credit" (NYSDOL P725). Paying an intern who also earns credit removes the question entirely.

Can nonprofits and public employers use unpaid interns?

Generally, yes. Fact Sheet #71's first footnote says the FLSA exempts certain people who volunteer for state or local government agencies or for humanitarian purposes at non-profit food banks, and that the DOL "recognizes an exception for individuals who volunteer their time, freely and without anticipation of compensation, for religious, charitable, civic, or humanitarian purposes to non-profit organizations." It concludes that "unpaid internships for public sector and non-profit charitable organizations, where the intern volunteers without expectation of compensation, are generally permissible." The fact sheet itself is written for "for-profit" employers. A nonprofit running a commercial operation, or one in a state with its own test, should still check.

Which states have stricter rules?

New York: eleven criteria, all required

New York's Department of Labor uses "six criteria from the U.S. Department of Labor and five criteria of its own," and says an employment relationship does not exist "only if the situation meets all of these criteria" (P725, Wage Requirements for Interns in For-Profit Businesses). Among them: the intern does not do "productive work (such as filing, other clerical work or helping customers)"; interns get written notice before they start that they will not be paid; they receive no employee benefits; the training is general rather than specific to the employer; the screening process is not the same as for employment; and ads for the program discuss education or training rather than employment. That is closer to the pre-2018 federal test than to the primary beneficiary test, and it is the standard for New York's minimum wage law.

California: older guidance, and discrimination protection

The most recent opinion letter on interns we found from California's Labor Commissioner, dated April 7, 2010, dropped the agency's former 11-factor test and applied the six criteria the federal DOL then used (DLSE opinion letter 2010.04.07). We found no later California guidance adopting the federal primary beneficiary test, so treat California as unsettled and design programs to meet the stricter criteria. Separately, California's Fair Employment and Housing Act makes it unlawful to discriminate in the selection or treatment of a person in "an unpaid internship" and to harass "an unpaid intern or volunteer" (Gov. Code 12940(c), (j)). New York gives interns similar protection in Executive Law 296-c.

What happens if an intern should have been paid?

An employer that violates the FLSA's minimum wage or overtime rules is liable for "their unpaid minimum wages, or their unpaid overtime compensation ... and in an additional equal amount as liquidated damages" (29 U.S.C. 216(b)). Claims must be brought within two years, or three for a willful violation (29 U.S.C. 255(a)). The federal minimum wage is $7.25 an hour (29 U.S.C. 206), and most states set a higher rate that applies instead. Interns found to be employees may also be owed state remedies, and unemployment and workers' compensation questions follow; our page on worker misclassification covers how one classification error spreads across laws.

A checklist before you run an unpaid internship

• For-profit program: a written learning plan tied to a school program, with credit or integrated coursework where possible.
• Hours and dates set around the academic calendar; a fixed end date.
• Interns shadow and do projects; they do not cover vacancies, peaks or routine customer work.
• A written statement, signed before the start, that the internship is unpaid and carries no promise of a job.
• The internship ad and screening talk about learning, not a job; no "trial period" used as unpaid work.
• New York roles: all eleven state criteria met, or pay the intern.
• California roles: program designed to the stricter criteria; FEHA anti-harassment training and policies cover interns.
• If in doubt, pay at least the applicable minimum wage; a paid internship removes the classification risk.