Interns: volunteer, unpaid intern or paid employee?

This guide is for small charities that have been asked to take on an intern, a student needing placement hours, a graduate looking for experience, or a young person who wants to help. "Intern" isn't a legal category. Depending on how the arrangement works, an intern may be a volunteer, an unpaid trainee or an employee who must be paid at least minimum wage. After reading, you'll know which fits your situation, the federal rules that apply, what changes if you pay a stipend, and what to put in writing.

This is general information about federal law. Your state's wage laws may be stricter, so check them too.

Quick comparison

Volunteer interns at a charity

The Department of Labor's internship fact sheet, Fact Sheet #71, is written mainly for "for-profit" employers. In a footnote, it explains that wage law makes room for people who "volunteer their time, freely and without anticipation of compensation" for religious, charitable, civic or humanitarian purposes at nonprofit organizations. It adds that "unpaid internships for public sector and non-profit charitable organizations, where the intern volunteers without expectation of compensation, are generally permissible."

That's good news for small charities, but it has limits. The Department's nonprofit fact sheet says volunteers usually don't "displace regular employed workers or perform work that would otherwise be performed by regular employees," and that a charity's paid employees "cannot volunteer to provide the same type of services" they're paid for. It also says people generally may not volunteer in a charity's commercial activities, such as a gift shop. In short, a charity can have volunteers, but not "volunteers" doing the jobs of paid staff.

So an unpaid intern at a charity is usually fine if:

• they truly expect no pay;
• the work serves your charitable purpose, not a business you run; and
• they aren't replacing someone you'd otherwise pay.

The "primary beneficiary" test

Fact Sheet #71 says courts have used the primary beneficiary test to decide whether an intern at a for-profit employer is in fact an employee: who really benefits more, the intern or the organization? The fact sheet doesn't say how the test applies to charities. At a charity, the first question is whether the intern is a true volunteer, as described above. But the factors are a useful check for training-style internships, especially if an arrangement doesn't clearly fit the volunteer rules. The fact sheet lists seven factors, and says "no single factor is determinative":

1. Both sides clearly understand there's no expectation of pay.
2. The training is similar to what an educational setting would give.
3. The internship is tied to the intern's formal education, through coursework or academic credit.
4. It fits the intern's academic calendar.
5. It lasts only as long as it gives the intern useful learning.
6. The intern's work complements, rather than displaces, paid staff, while giving significant educational benefits.
7. Both sides understand there's no promise of a paid job at the end.

The more of these that fit, the more likely the intern is the primary beneficiary and isn't an employee. If you're unsure, get advice before the internship starts.

When an intern is really an employee

These are warning signs that an intern is really an employee who must be paid at least minimum wage:

• they do work you'd otherwise hire someone to do, like running the front desk or doing the bookkeeping;
• you depend on their hours to keep a program going;
• they work in a commercial activity you run, like a shop;
• they're already one of your paid employees, doing the same kind of work they're paid for;
• there's little real teaching or supervision; or
• they expect to be paid, or you've promised them a paid job at the end.

If you're paying an intern, follow the same steps as for any employee. Our guide to hiring your first employee explains payroll and tax forms, and our employee or contractor guide explains how to tell employees and contractors apart.

Stipends and academic credit

• Stipends. A small stipend can make an internship possible for students who can't afford to work for free. But regular payments tied to hours can look like wages. Our guide to volunteer stipends explains the risks and the tax side.
• Reimbursing expenses. Paying back real costs, like travel to a program site, with receipts, isn't pay. See volunteer expenses.
• Academic credit. If a school awards credit, it will usually have its own agreement and evaluation form. Read it carefully: it may ask you to supervise and report on the student's learning.

Young interns

High school students and other minors need extra care: parental consent, safeguarding and, for paid work, child labor rules. The Department of Labor's child labor fact sheet says children under 14 generally may not be employed in non-farm jobs covered by the law, 14- and 15-year-olds may work only limited hours outside school hours, and "no one under 18 may be employed in any occupation the Secretary of Labor has declared to be hazardous." Many states have their own child labor rules, and when both apply, "the law with the stricter standard must be obeyed." Our guide to youth volunteers covers age rules and supervision, and our volunteer screening and safeguarding guide explains how to keep young people safe.

Put it in writing

Whatever kind of intern you take on, write down:

• the purpose and what the intern will learn or do;
• the schedule and how long it lasts;
• who supervises them;
• whether it's paid, and if not, that both sides agree there's no expectation of pay or a later job;
• expenses you'll reimburse; and
• confidentiality and safety rules.

For volunteer interns, our volunteer agreement template works well.

Your internship checklist

• We decided whether this is a volunteer, unpaid educational or paid internship
• An unpaid intern isn't replacing paid staff or working in a commercial activity
• We checked the primary beneficiary factors for training-style internships
• Paid interns go through payroll like any employee
• Any stipend was checked against the volunteer stipend rules
• A named supervisor meets the intern regularly
• The arrangement, including pay or no pay, is in writing
• We followed our youth and safeguarding rules for interns under 18
• We checked our state's wage laws