Practice Pointer: Wage and Benefit Considerations for Summer Interns

July 17, 2025

Summer has officially arrived and for many organizations, the warm weather typically brings summer schedules, relaxed dress code, and eager interns. Internships can be a win-win; the intern gains real work experience and the employer benefits from additional support during the months when many employees take time off. Although hiring an intern may seem straightforward, several key elements should be considered. Internship programs can provide value to both the student and the organization if they are compliant with applicable employment laws. Keep in mind that an internship that offers college credits is different than a paid summer position.

The Fair Labor Standards Act (FLSA) requires “for-profit” companies to pay employees for all work completed. These rules do not apply to internships in the public sector or at nonprofit organizations. The FLSA provides a seven-point “primary beneficiary” test to help determine if the role is truly for an intern or for an employee and whether they are entitled to minimum wage, overtime, and other wage and hour protections. When utilizing the test, no one factor is determinative; you must review all the information for each internship position within the company to ascertain if it is classified correctly.

Primary Beneficiary Test

Federal law regulates the “primary beneficiary” test under the FLSA, but employers should also be aware of the applicable state and local laws and any additional measures that may apply to classify an intern. Here are the seven factors the FLSA considers when applying the test:

1. The intern and the employer clearly understand that there is no expectation of compensation.
2. The internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
3. The internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
4. The internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
5. The internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
6. The intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
7. The intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Benefits, Programs, Protections, and Considerations

In addition to wages, other laws and regulatory programs may apply to the intern depending on the role’s classification. For example, many state sick time laws apply to all workers earning wages, which include paid interns and paid apprenticeships. Some states also consider interns employees and provide protections under various state anti-discrimination and/or sexual harassment statutes.

Employers often question whether interns are eligible for benefits. The answer is that it depends. For internal benefits, such as holiday pay for observances that occur during the internships, organizations should clearly outline eligibility (and ineligibility). Other benefits, such as health insurance coverage, are driven by requirements under the Affordable Care Act (ACA). For other benefits, such as dental and vision, employers should refer to their benefit plan documents for guidance.

Practical Tips

Employers should evaluate each internship on a case-by-case basis using the seven-point test. If it is determined that they should be classified as employees, interns will need to be paid at least minimum wage and overtime in accordance with the FLSA and state overtime laws, if applicable. Are you confident that your interns are classified correctly? Here are some helpful tips when considering and/or hiring interns:

• Review existing and/or new unpaid internship programs to ensure the unpaid intern is the primary beneficiary of the internship.
• If you go through the test and are still unsure how to classify, best practice is to err on the side of caution and classify the individual as an employee and pay them at least the minimum wage and overtime when applicable.
• If the intern is classified as an employee, they should be hired per regular practice, including an offer letter with anticipated start and end dates, Form I-9, tax documents, and policy acknowledgements. Keep in mind, they may also be eligible for benefit offerings, sick time, and state leave programs
• If hiring an unpaid intern, document how and why the intern is the primary beneficiary for your internal records and review the terms of the engagement with the intern.

If you have any questions regarding this Practice Pointer, please email us.