Unpaid Internships & Wage Law

For decades, unpaid internships have been marketed as golden tickets: a way for students to get a foot in the door, build résumés, and make connections that might lead to a real job. But behind the rhetoric of “opportunity” lies a harsher reality. Unpaid internships often substitute for paid labor, exclude those who cannot afford to work for free, and sometimes cross the line into outright violations of wage and hour law. In 2025, the conversation has sharpened. Employers still use unpaid interns widely, especially in media, politics, and nonprofits. But lawsuits, regulatory crackdowns, and shifting norms around fair pay are forcing organizations to rethink whether “experience” can legally — or ethically — replace wages. For students, recent graduates, and even mid-career workers seeking transitions, understanding where unpaid internships are legal and where they cross into exploitation is essential financial literacy.

The Legal Framework: The FLSA and the “Primary Beneficiary Test”

The Fair Labor Standards Act (FLSA) is the cornerstone of U.S. wage law. Under the FLSA, workers are generally entitled to minimum wage and overtime. The question is whether unpaid interns count as “employees.” The Department of Labor (DOL) uses the “primary beneficiary test” to decide. This flexible test looks at who benefits more from the internship — the intern or the employer. Courts consider factors like: Whether the internship is tied to an educational program.

Whether the intern receives training similar to what they’d get in school.

Whether the internship is limited in duration and structured around learning.

Whether the employer displaces regular employees.

Whether there is an expectation of compensation or a job offer.

If the employer is the primary beneficiary — getting free labor for productive work — the intern is likely an employee entitled to wages. If the intern is the primary beneficiary — receiving structured training that primarily serves their education — unpaid status may be lawful.

Common Industries and Practices

Unpaid internships cluster in certain fields:

Media and Entertainment. Publishing, film, and fashion have long histories of unpaid internships, often justified by “prestige.” Lawsuits against major magazines and production companies have exposed systemic violations.

Politics and Government. Congressional offices and campaigns often rely on unpaid interns, though recent reforms have increased paid opportunities. The imbalance remains, especially at the state and local level.

Nonprofits. Many charities use unpaid interns, arguing that limited budgets justify the practice. Courts sometimes give nonprofits more leeway, but not when interns perform work indistinguishable from employees.

Startups. Cash-strapped startups frequently recruit unpaid interns with promises of “equity” or “experience.” Without a structured educational program, these arrangements often fail the legal test.

These patterns reveal a cultural divide: industries that can rely on a steady supply of ambitious young people often push the boundaries of wage law.

Economic and Social Costs

Unpaid internships carry significant economic consequences:

Exclusionary access. Only students with financial support can afford to work without pay, reinforcing privilege and limiting diversity.

Lost wages. The Economic Policy Institute estimates that unpaid internships cost workers collectively billions in foregone wages annually.

False promises. Studies show that unpaid internships do not reliably increase job offers compared to paid internships, undermining the “career springboard” narrative.

The social cost is equally stark: unpaid internships perpetuate inequality by privileging those who can afford to subsidize employers with free labor.

Enforcement and Litigation

Over the past decade, lawsuits have challenged unpaid internships across industries. Landmark cases include:

Glatt v. Fox Searchlight Pictures (2013). Interns on the film Black Swan sued, alleging they performed menial tasks without pay. The Second Circuit adopted the “primary beneficiary test,” reshaping the legal landscape.

Hearst Magazines litigation (2016). Interns claimed they were exploited in fashion and editorial roles. Settlements highlighted systemic practices.

Recent settlements. Media companies, fashion houses, and even nonprofits have paid millions in back wages after DOL investigations.

Despite these cases, enforcement remains uneven. Many interns do not know their rights or fear retaliation.

The 2025 Landscape: Shifting Norms and Gray Zones

By 2025, the culture of unpaid internships is changing but not disappearing. Corporate reforms. Large companies, especially in tech and finance, increasingly pay interns to compete for talent and avoid legal risk.

Political pressure. Congress now funds stipends for interns, though implementation varies. Nonprofits face growing scrutiny over reliance on unpaid roles.

Hybrid work. Remote internships create new risks: employers may label interns “volunteers” while assigning tasks indistinguishable from regular employees.

Gray zones persist. Some universities partner with employers to offer academic credit in place of pay. While credit can legitimize unpaid internships under the “primary beneficiary test,” it raises equity concerns: students often pay tuition for the privilege of working for free.

International Comparisons

Other countries regulate internships more tightly:

Canada. Most provinces ban unpaid internships outside of formal educational programs.

U.K. The law requires interns performing actual work to be paid at least the minimum wage, though enforcement gaps remain.

European Union. Many EU countries impose strict limits on unpaid internships, with growing political pressure to abolish them altogether.

The U.S. remains more permissive, relying on flexible standards rather than bright-line rules.

When Employers Cross the Line

Employers step out of bounds when:

Interns replace paid staff, performing routine work that the business depends on.

Internships extend indefinitely without clear educational structure.

Employers promise “exposure” or “credit” but provide little training.

Nonprofits exploit interns for operational roles beyond genuine volunteerism.

In these cases, unpaid internships likely violate the FLSA, and interns are entitled to back pay.

Practical Takeaways for Interns

Ask upfront. Is this internship tied to school credit? Will you receive structured training, or just tasks?

Document your role. Keep records of assignments. If you’re doing the work of an employee, you may be owed wages.

Know your state law. Some states, like California, impose stricter standards on unpaid internships.

Push for pay. Paid internships correlate strongly with better career outcomes. If an employer refuses, weigh whether the “experience” is worth the cost.

Bottom Line

Unpaid internships straddle the line between opportunity and exploitation. In 2025, the law gives employers some room to structure unpaid roles, but the central principle remains: interns cannot be free labor. The “primary beneficiary test” ensures that the balance must tilt toward the intern’s benefit, not the employer’s bottom line. For students and jobseekers, the lesson is clear: don’t mistake “experience” for compensation. If an internship primarily benefits the organization, it’s not just unfair — it may be illegal. For employers, the trend is unmistakable: pay your interns, or risk lawsuits, reputational harm, and a shrinking pool of talent willing to work for free.

Glossary

FLSA (Fair Labor Standards Act). The federal law governing minimum wage and overtime, central to internship classification.
Primary beneficiary test. The legal framework used to determine whether an internship is primarily for the intern’s benefit (lawful unpaid) or the employer’s benefit (requires pay).
Academic credit internship. An unpaid internship tied to university credit, often used to justify lack of wages.
Volunteer exception. An allowance for unpaid roles at nonprofits, provided the work is truly voluntary and not replacing paid staff.
Back pay. Compensation owed to interns if an unpaid internship is later deemed unlawful.

Sources & Further Reading

U.S. Department of Labor, Fact Sheet #71: Internship Programs Under the FLSA (2023): https://www.dol.gov/agencies/whd/fact-sheets/71-flsa-internships