Who Can Be an Intern? Understanding the Rules — and the Risks
When bringing interns into your business, it’s important to make sure you can legally classify them as interns. While having an unpaid intern can be a cost-effective way to provide training opportunities and gain temporary support, misclassifying an intern who should actually be considered an employee can lead to steep financial and legal consequences.
Who Qualifies as an Intern?
Internships can be a valuable experience for both the intern and your business, but the law focuses on one key question: Who benefits most from the relationship?
Courts apply what’s called the “primary beneficiary” test to determine who is an intern. If the intern is the primary beneficiary—meaning they’re gaining education, experience, and training—then the classification as an intern is usually appropriate. But if the business gains more benefit from the intern’s work than the intern gains from the experience, that person may legally be an employee and entitled to pay and benefits.
The Seven Factors Courts Consider
Courts look at seven factors to decide whether an intern is properly classified:
No expectation of pay. Both the intern and the business should clearly understand that the internship is unpaid.
Training similar to an educational environment. The experience should feel like learning—not just labor.
Connection to formal education. Ideally, the internship ties into coursework or offers academic credit.
Scheduling flexibility. The internship should respect the intern’s academic calendar.
Limited duration. It should last only as long as the intern is actively learning and benefiting.
Complementary work. The intern’s contributions should enhance, not replace, the work of paid employees.
No promise of a paid job. Both the intern and the business should understand that the internship doesn’t guarantee employment afterward.
No single factor is decisive—courts look at the entire picture to determine who truly benefits from the relationship.
Risks of Misclassifying Interns
The advantage of hosting unpaid interns is clear: businesses can provide hands-on experience without adding to payroll costs. However, if an intern is later found to be an employee under the law, the cost of misclassification can be substantial.
Businesses may be required to pay back wages, overtime, benefits, taxes, and even penalties for each misclassified worker.
Minimizing the Risks of Misclassification
Fortunately, there are proactive steps that your business can take to reduce the risks of misclassification. These include:
Evaluating all current and future internship classifications to ensure they comply with the primary beneficiary test.
Drafting an internship agreement that outlines the terms of the relationship
The decision to classify an individual as an intern cannot be a choice of convenience dictated by financial and logistical benefits. Rather, it is a determination that requires a careful and individualized assessment in order to minimize the risk of misclassification and the potential liability it entails. Taking proactive steps now can save your business from significant legal and financial consequences in the future.
Levene Legal can help you take these steps. We can evaluate your current classifications as well as draft and review intern agreements.
