Employer guideRead at source, 8 September 2026
Unpaid Internship Laws in 2026: The Federal Test, and Where States Go Further
Under the Fair Labor Standards Act there is no list of boxes to tick. The Department of Labor applies a seven-factor primary beneficiary test, set out in Wage and Hour Division Fact Sheet #71, updated January 2018, and it says plainly that the test is flexible and that no single factor is determinative. If the balance tips to the employer, the intern is an employee and is owed minimum wage and overtime. Some states do not work that way. New York requires all eleven of its criteria to be met before an unpaid internship at a for-profit business is lawful, and gives a claimant six years to sue against the federal two. The same program can be lawful in one state and not in the next.
The federal test: seven factors, and nothing to add them up with
Fact Sheet #71 lists seven factors that determine who the primary beneficiary of the relationship is — the intern, or the business. The DOL's own framing matters as much as the list: the test is flexible, no single factor is determinative, and courts examine all the circumstances rather than applying a formula. There is no passing score. You cannot satisfy five and call it settled.
That cuts both ways. It means one weak factor does not automatically sink a genuine educational program. It also means you cannot engineer compliance by papering over the one thing you are actually doing, which is getting work done for free.
| The factor, as DOL words it | What failing it looks like in practice |
|---|---|
| The extent to which the intern and the employer clearly understand that there is no expectation of compensation | No written statement before day one. A vague conversation about "we'll see about a stipend" is the opposite of a clear understanding. |
| The extent to which the internship provides training that would be similar to that which would be given in an educational environment | The training is how to use your ticketing system. Genuine instruction, not onboarding, is what this asks for. |
| The extent to which the internship is tied to the intern's formal education program by integrated coursework or the receipt of academic credit | No school involved at all. Credit is not strictly required, but its absence removes one of the strongest points in your favor. |
| The extent to which the internship accommodates the intern's academic commitments by corresponding to the academic calendar | Shifts scheduled during exams, or a program that runs year-round regardless of term dates. |
| The extent to which the internship's duration is limited to the period in which the internship provides the intern with beneficial learning | Month seven looks exactly like month two. Once the learning stops, the clock is running against you. |
| The extent to which the intern's work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern | The intern covers a shift you would otherwise have to fill. This is the factor most unpaid programs actually fail. |
| The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion | The program is pitched internally, or to the intern, as an extended interview for a specific opening. |
New York writes a checklist, and all eleven boxes must be ticked
The New York State Department of Labor states the condition in capitals on its own page: an employment relationship does not exist only if the situation meets all of these criteria. There are eleven of them for for-profit businesses. Seven map roughly onto the federal factors. Four have no federal equivalent at all, and they are the ones that catch employers who assumed federal compliance was enough.
| New York criterion | Federal equivalent? |
|---|---|
| Training is similar to that given in an educational program | Yes — factor 2 |
| Training is for the benefit of the intern | Yes — the primary beneficiary question itself |
| Interns do not displace regular employees and work under close supervision | Yes — factor 6 |
| The employer derives no immediate advantage from the intern's activities | Partly — federal law asks about displacement, not advantage. This is stricter. |
| Interns are not entitled to a job when the training ends | Yes — factor 7 |
| Interns receive written notice that they are not employees and will not be paid | No federal equivalent. Federal law asks for a clear understanding; New York asks for it in writing. |
| Any clinical training is supervised by knowledgeable, experienced personnel | No federal equivalent. |
| Interns receive no employee benefits | No federal equivalent. A perk you offered to be generous can defeat the exemption. |
| Training is general and transferable, not specific to your business | Partly — federal factor 2 is about educational similarity, not transferability. |
| The screening process differs from your employment recruitment process | No federal equivalent. |
| Advertisements emphasize education and training rather than employment | No federal equivalent — and it is a rule about the words in your job ad. |
The two that touch recruiting directly
Two New York criteria are about how you advertise and screen, not how you supervise. Your posting has to read as education and training rather than as a job, and your selection process has to look different from hiring. An employer who runs the internship through the same applicant tracking workflow, with the same interview loop and the same job-ad copy as a paid role, has failed two of eleven before anybody starts work.
Washington points back at the federal test, with one useful clarification
Washington's Department of Labor & Industries frames the question the same way the DOL does: whether an intern must be paid "depends on who benefits from the work completed," and it directs employers to the federal guidance for the detail. What Washington adds is a practical line about money. Compensation that is not intended to be a wage — L&I names a stipend or reimbursement for expenses — may be acceptable. But if an employer pays a regular wage similar to what other employees receive, the intern is an employee. Covering a bus pass is not the same as paying someone quietly.
What it costs when the classification is wrong
If the balance tips and your intern was an employee, Fact Sheet #71 is blunt about the consequence: they must be paid both minimum wage and overtime under the FLSA. That liability is not limited to the person who complained, and it is not limited to this year.
Federal claims must be brought within two years of the cause of action accruing, extending to three years for a willful violation, under 29 U.S.C. § 255(a). New York gives a claimant six years under Labor Law § 663. A program that ran four summers in New York is entirely within the window; the same program in a state that follows the federal period may be half out of it. The look-back, not the hourly rate, is what turns a misclassified internship into a real number.
Check your own program against the seven factors
This runs the federal factors, in DOL's own terms, over the program you actually operate. It is not legal advice and it does not produce a verdict — there is no passing score in the real test either. What it does is show you where the weight is sitting.
Seven-factor self-check
What this means for the job ad
Two things follow for anyone writing the posting. The first is federal and applies everywhere: an advertisement that sells the internship as a route into a paid job undercuts factor seven in your own words, in a document you published and cannot un-publish. If the program genuinely is a pipeline into hiring, that is a fine thing to run — but then it is probably a paid one.
The second is New York's, and it is unusually specific for a wage rule: advertisements must emphasize education and training rather than employment, and the screening process must differ from your employment recruitment process. In practice that means an unpaid internship in New York should not be posted through the same funnel, in the same voice, as your open roles. If you are advertising both, keep them visibly separate.
The general craft of a posting that gets read is a separate problem, and we have written about it in what makes a good job ad. The point here is narrower: for unpaid internships, the ad copy is not just marketing. In at least one state it is evidence.
Frequently asked questions
Are unpaid internships legal in the United States?
They can be, under the Fair Labor Standards Act, if the intern rather than the employer is the primary beneficiary of the relationship. The Department of Labor applies a seven-factor test set out in Wage and Hour Division Fact Sheet #71, updated January 2018. The test is flexible and no single factor is determinative. If the balance favors the employer, the intern is an employee and must be paid minimum wage and overtime.
What is the primary beneficiary test?
It is the standard the Department of Labor uses to decide whether an intern is an employee. The seven factors cover whether both sides understand the internship is unpaid, whether the training resembles education, whether it is tied to a formal education program by coursework or credit, whether it accommodates the academic calendar, whether its duration is limited to the period of beneficial learning, whether the work complements rather than displaces paid employees, and whether both sides understand there is no entitlement to a paid job at the end.
Does an unpaid intern have to receive academic credit?
Not as an absolute requirement under federal law. Academic credit is one of the seven factors — the extent to which the internship is tied to a formal education program by integrated coursework or the receipt of academic credit — and because no single factor is determinative, its absence does not automatically make the intern an employee. It does remove one of the strongest points in an employer's favor.
Is New York stricter than federal law on unpaid internships?
Yes, and in a structurally different way. The New York State Department of Labor lists eleven criteria for for-profit businesses and states that an employment relationship does not exist only if all of them are met. Four have no federal equivalent: written notice that the intern is not an employee and will not be paid, supervision of clinical training by knowledgeable and experienced personnel, the intern receiving no employee benefits, and a screening process that differs from employment recruitment. New York also requires advertisements to emphasize education and training rather than employment.
Can we pay an intern a stipend and still treat the internship as unpaid?
Washington's Department of Labor & Industries addresses this directly: compensation that is not intended to be a wage, such as a stipend or reimbursement for expenses, may be acceptable, but if an employer pays a regular wage similar to what other employees receive, the intern is an employee. Note also that New York's criteria require interns to receive no employee benefits, so a perk offered out of generosity can defeat the exemption there.
How far back can a misclassified intern claim unpaid wages?
Under 29 U.S.C. § 255(a), a federal action must be commenced within two years after the cause of action accrued, extending to three years for a willful violation. New York Labor Law § 663 allows six years. The look-back period, rather than the hourly rate, is usually what determines the size of the exposure.
Advertising the internship is the easy part to get wrong.
In New York the wording of the ad is one of eleven criteria, and everywhere else it is evidence of what both sides understood. We write and run employer job ads on Facebook and Instagram, and report what each applicant costs with the management fee inside.
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