Are Unpaid Internships Legal? What Employers and Interns Need to Know in 2025

With more companies offering internships to attract fresh talent, many students and graduates are asking: Are unpaid internships legal?

The short answer is: Yes, but only under specific conditions. In the U.S., unpaid internships must comply with federal and state labor laws. When done right, they can provide educational value and career experience. When done wrong, they may violate the Fair Labor Standards Act (FLSA), leading to lawsuits and penalties.

In this article, you’ll learn:

When unpaid internships are legal
What the law says (FLSA 7-factor test)
Employer obligations
Red flags of illegal unpaid internships
What interns can do if their rights are violated

Are Unpaid Internships Legal in the U.S.?

Yes, unpaid internships can be legal—but only when they meet the requirements outlined by the U.S. Department of Labor (DOL) under the Fair Labor Standards Act (FLSA).

Employers must ensure the internship is primarily for the benefit of the intern, not the company.

Important: Interns at for-profit companies must be classified properly. If they don’t meet the legal criteria, they must be paid at least the federal minimum wage and overtime.

The 7-Factor Test: How the DOL Determines Legality

To determine if an unpaid internship is legal, the DOL uses a “primary beneficiary test” based on seven factors:

Factor #	Test Description
	The intern clearly understands they won’t be paid
	The internship provides training similar to an educational environment
	The internship is tied to the intern’s formal education program (credit, coursework)
	The internship accommodates the intern’s academic commitments (e.g., class schedule)
	The internship’s duration is limited to the period of beneficial learning
	The intern’s work does not displace regular employees
	Both parties understand there’s no promise of a paid job at the end

If most or all of these factors are met, the intern is not considered an employee under the FLSA, and the internship can be unpaid.

Are Unpaid Internships Legal at Nonprofits or Government Agencies?

Yes. Interns at:

Government agencies
Charitable nonprofits
Religious organizations

…are often allowed to work without pay under the “volunteer” exception. However, they must not be replacing paid workers or performing high-level tasks full-time.

Red Flags of an Illegal Unpaid Internship

If any of the following apply, the internship may violate labor laws:

The intern is doing entry-level work that benefits the company more than themselves
No training or mentoring is provided
The intern is working full-time hours with no academic component
The intern is promised future paid employment in exchange for free labor
The company saves money by using interns instead of hiring staff

If an intern is performing the same tasks as paid employees, they should likely be compensated.

Do Interns Have to Be Paid Minimum Wage?

If the internship does not meet the 7-factor test, then yes—interns must be paid at least the federal minimum wage ($7.25/hour as of 2025) or the state/local minimum wage, whichever is higher.

In California, for example, most interns must be paid $16/hour or more, depending on the city.

Do Interns Need Workers’ Comp or Insurance?

Even unpaid interns should be protected in the workplace. Depending on the state, employers may need to provide:

Workers’ compensation
General liability coverage
Harassment and discrimination protections
A safe and inclusive environment

Interns should also be covered under the employer’s equal opportunity policies.

Tips for Legal and Ethical Internship Programs (For Employers)

Partner with colleges or universities to provide credit
Limit intern hours to part-time to avoid employee classification
Assign a mentor or supervisor for training
Avoid using interns for operational or revenue-generating tasks
Provide clear documentation of the learning experience and expectations

Transparency is key—create an intern agreement outlining the unpaid status and learning goals.

What Interns Should Know About Their Rights

If you’re applying for or working in an unpaid internship:

Ask if it provides college credit or educational value
Ensure you’re not replacing a paid employee
Don’t be afraid to speak up if something feels exploitative
Keep records of your tasks, hours, and communication

You can report suspected violations to the U.S. Department of Labor Wage and Hour Division or your state labor office.

Are Unpaid Internships Legal in Other Countries?

Many other countries have stricter rules than the U.S.:

Country	Unpaid Internships Legal?
Canada	Generally not legal unless tied to school credit
UK	Illegal unless part of a formal education program
Australia	Legal only under vocational placement rules
Germany	Must be paid unless under 3 months for school credit
India	Often unpaid, but laws are evolving

Always check the local labor laws before participating in international internships.

Conclusion

So, are unpaid internships legal?
Yes—but only if they meet specific conditions outlined by the Department of Labor. The experience must prioritize education over profit, and interns should not replace employees.

If you’re a business, design your internship programs carefully to avoid legal risk. If you’re an intern, know your rights and ensure you’re receiving the training and experience promised.

Bottom line: When done ethically and legally, unpaid internships can benefit both interns and employers. But when abused, they can lead to fines, lawsuits, and damaged reputations.