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Interns can bring energy, fresh ideas, and valuable support to your business. But, bringing them on without a clear understanding of the rules can lead to problems. Whether you’re hiring a student for a summer project or building a formal internship program, there are legal and HR details that shouldn’t be overlooked.
It’s not as simple as offering experience in exchange for free help. Following expert HR compliance guidelines about what’s allowed (and what isn’t) can help protect your business and make the internship a productive experience for everyone involved.
Paid or Unpaid—What’s Legal?
The U.S. Department of Labor (DOL) uses the Primary Beneficiary Test to determine whether an intern is considered an employee under the Fair Labor Standards Act (FLSA). The core question is who benefits most from the arrangement.
The test looks at several factors, including whether the intern receives training similar to an educational setting, whether the internship aligns with academic commitments, and whether the intern’s work complements rather than replaces paid employees. No single factor dictates the outcome, but the position may legally be unpaid if the intern is the primary beneficiary.
If the employer is the primary beneficiary, the intern must be paid at least minimum wage and receive overtime pay under federal law. This applies regardless of whether the intern is receiving school credit.
One common mistake employers make is treating interns as free labor for routine work that should be handled by regular staff. Another is failing to document how the internship offers meaningful educational value. Misclassification risks legal action and can damage your organization’s reputation and student partnerships.
Insurance Matters
Interns can be a game changer, but they also carry risks. Whether paid or unpaid, your intern program should be backed by the right insurance coverage to protect your business and the individuals involved.
Workers’ Compensation
You may be required by state law to have workers’ compensation insurance, even for interns. If an intern is considered an employee under your state’s rules, you must carry this coverage in case of on-the-job injuries. The regulations vary, so looking at local laws is the best place to start.
General Liability and Professional Liability
These policies offer protection if an intern’s actions cause harm or result in a claim. For example, professional liability could come in handy if an intern contributes to a client-facing project that leads to a complaint.
Auto Insurance
If your intern uses a vehicle for business, their own or one you provide, you may need auto insurance that addresses potential liability or damage.
It’s a mistake to assume unpaid interns don’t need coverage. They may be present in your workplace, interact with customers, or access company systems. Some liability policies can be extended to cover unpaid workers, but you’ll need to confirm the terms with your provider.
What Interns Can and Can’t Do
Interns are brought on to learn, not to replace regular staff. They shouldn’t fill gaps left by full-time workers or be tasked with high-risk assignments alone. Appropriate jobs for interns usually focus on learning and support.
Shadowing staff, participating in training sessions, helping with low-stakes research, or assisting with admin duties are all fair game. These tasks give interns valuable exposure without putting too much responsibility on their shoulders.
Organizations must be clear about what interns are there to do. Ambiguity leads to risk, especially if interns are left to do jobs that require specific training or safety protocols. Defined roles help prevent liability issues and protect you and the intern from unintended consequences.
Interns bring fresh perspectives and energy but come with rules that can’t be overlooked. Whether you’re hosting a student earning school credit or someone looking for hands-on experience, clear guidelines protect you and the intern. From pay requirements to insurance and job duties, every detail matters. If you’re unsure where to start or how to tighten up your current approach, working with a knowledgeable HR partner can help you confidently move forward.
Confused by employee classification? PES can help! We’re here to take care of all your HR needs so you can focus on growing your business. Contact us for your HR Review and Needs Analysis today!