Students and career-changers often ask whether an unpaid internship in New York is allowed. The honest answer is: sometimes. There is no blanket rule that says internships must be paid, and no blanket rule that says they can be unpaid. What matters is whether the person is really an intern or is, in legal terms, an employee. If it is an employment relationship, minimum wage and overtime rules apply. If it is a genuine educational arrangement, they may not. This article walks through the tests the New York State Department of Labor and the U.S. Department of Labor use. It is general information, not legal advice, and every real situation depends on its facts.
Why the label "intern" does not settle anything
A job title does not decide who is an employee. Both the state and federal agencies look at the substance of the arrangement: who benefits, what the person actually does day to day, whether they replace paid staff, and what was promised. In the Department of Labor's wording, an intern is exempt from the State Minimum Wage Act and the wage orders only if the intern is not in an employment relationship.
The state guidance also makes clear what it covers. It applies to the State Minimum Wage Act and wage orders. It does not decide questions under unemployment insurance, workers' compensation or any other law, and its rules sit alongside federal law, including the Fair Labor Standards Act.
New York's test for for-profit businesses
For for-profit employers, the New York State Department of Labor uses six criteria taken from the U.S. Department of Labor and five of its own, for eleven in all. In the guidance, an employment relationship does not exist only if the situation meets all of the criteria. In paraphrase, they are:
- Training similar to education. Even though it involves the employer's real operations, the training is similar to what an educational program provides and builds on classroom or academic experience, not on the employer's operations.
- Benefit to the intern. The intern is the primary beneficiary; any benefit to the employer is merely incidental.
- No displacement of staff. Interns do not replace or add to regular employees, and they work under close supervision.
- No immediate advantage to the employer. The employer does not gain an immediate advantage from the intern's activities; operations may even be slowed.
- No guaranteed job. The intern is not necessarily entitled to a job at the end and is free to take jobs elsewhere in the field. The internship runs for a fixed period set in advance, and it should not be used as a trial period for hiring.
- Written notice. The intern is told in writing, clearly and before the internship begins, that no wages will be paid and that they are not considered an employee for minimum wage purposes.
- Qualified clinical supervision. Any clinical training is supervised by people who are knowledgeable and experienced in the activity.
- No employee benefits. Examples listed include health and dental insurance, pension or retirement credit, and discounted or free goods and services from the employer.
- General, transferable training. The training qualifies the intern to work in any similar business and is not designed for a job with that employer. The guidance says training specific to the employer and its operations is conclusive evidence of an employment relationship.
- Separate screening. The screening process for the internship is not the same as for employment and does not appear to be for that purpose.
- Education-focused postings. Advertisements and postings discuss education or training rather than employment, although the employer may indicate that qualified graduates could be considered for employment.
The guidance gives practical illustrations. Interns are generally viewed as employees if the company would need to hire additional staff or have existing staff work more hours to do the interns' work, or if they substitute for regular workers. Job shadowing under close and constant supervision, with no or minimal work performed, is more likely to be viewed as a true educational experience. The longer an internship lasts, the more likely it is to be treated as an employment relationship.
On academic credit, the guidance says there is no prohibition on being paid while also receiving credit, as long as the employer follows all applicable minimum wage and overtime laws. It also says credit from the school is "some evidence" of the beneficial nature of a program, not proof by itself.
The federal test
Under the federal Fair Labor Standards Act, the U.S. Department of Labor's Fact Sheet 71 describes a "primary beneficiary" test for internships at for-profit employers. The question is whether the intern or the employer is the primary beneficiary of the relationship, and the fact sheet lists seven factors:
- Whether the intern and employer clearly understand that there is no expectation of compensation (any promise of pay, express or implied, suggests an employee).
- Whether the internship provides training similar to what would be given in an educational environment, including clinical and other hands-on training.
- Whether the internship is tied to the intern's formal education program through integrated coursework or academic credit.
- Whether the internship accommodates the intern's academic commitments, for example by following the academic calendar.
- Whether the internship's duration is limited to the period in which it provides beneficial learning.
- Whether the intern's work complements, rather than displaces, the work of paid employees while providing significant educational benefits.
- Whether the intern and employer understand that the internship carries no entitlement to a paid job at its end.
The fact sheet describes the test as flexible. No single factor decides the outcome, and the answer depends on the circumstances of each case. That is a real difference from the state approach, which asks that the situation meet all of its listed criteria.
Nonprofits are not automatically exempt
People sometimes assume an unpaid internship is fine at a charity. The New York State Department of Labor's guidance for not-for-profit organizations says there is no section of the Labor Law that exempts "interns" at not-for-profits from the minimum wage requirements. Such workers may fall within one of a few specific exceptions, and the for-profit criteria above can also be met by a not-for-profit:
- Volunteers. A person may do volunteer work at a not-for-profit that is set up and operates strictly for charitable, educational or religious purposes. The guide lists restrictions: volunteers may not replace or augment paid staff, may not be required to work certain hours or perform duties involuntarily, may not be under a contract to hire, and may not be paid for their services apart from reimbursement of expenses.
- Students. Students at a qualifying organization may be exempt under stated conditions, including that they attend an institution of learning with courses leading to a degree, certificate or diploma, and that the organization keeps specified records and a statement from the school.
- Trainees and learners. A bona fide training program with formal instruction and on-the-job training can qualify, with limits on responsibility, supervision and the length of the training.
The federal fact sheet is consistent on the broad point that unpaid internships in the public sector and at charitable nonprofits are generally permissible when the person volunteers without an expectation of compensation, but the state guidance spells out conditions that are worth reading in full.
Questions to ask before accepting an unpaid internship
- Does the internship build on a course or program, and does a school oversee it or award credit?
- Is there a written statement, before the start date, that no wages will be paid?
- Will the work involve routine tasks the organization would otherwise pay someone to do, such as filing, answering customers or covering shifts?
- Is there a fixed end date, and is the internship separate from any promise of a job?
- Who supervises the intern, and is there real training involved?
- Is the organization for-profit or a not-for-profit, and which exception, if any, would apply?
If the answers point toward doing a regular employee's work for no pay, that is a sign to ask more questions. The state Department of Labor publishes the guidance quoted here on its website, and legal aid groups and worker centers can often explain the options. Workers can also read our guide to worker rights in New York for background on wages, overtime and reporting problems.
Bottom line
Unpaid internships are not simply legal or illegal in New York. At for-profit businesses, the state Department of Labor treats a person as exempt from the minimum wage only if the arrangement meets all eleven criteria it lists, and the federal government uses a flexible seven-factor test. At not-for-profits, the state guidance says there is no general intern exemption; specific volunteer, student and trainee exceptions exist, and a not-for-profit may also use the for-profit criteria. Because the answer turns on the facts, the safest course is to read the current official guidance and ask for advice before agreeing to unpaid work.
Sources
- New York State Department of Labor, Wage Requirements for Interns in For-Profit Businesses (publication P 725, 6/23): https://dol.ny.gov/wage-requirements-interns-profit-businesses
- New York State Department of Labor, Wage Requirements for Interns in Not-For-Profit Businesses (publication P 726, 6/23): https://dol.ny.gov/wage-requirements-interns-not-profit-businesses
- U.S. Department of Labor, Wage and Hour Division, Fact Sheet 71: Internship Programs Under The Fair Labor Standards Act: https://www.dol.gov/agencies/whd/fact-sheets/71-flsa-internships