Do internships have to be paid?

For-profit employers must pay interns at least minimum wage and overtime unless the internship satisfies the U.S. Department of Labor's "primary beneficiary" test, meaning the intern, not the company, is the main beneficiary of the arrangement. Unpaid internships are most defensible when they are tied to a formal education program, provide training similar to an academic setting, and do not displace paid workers. Many companies simply pay interns to avoid the risk of misclassification.

What is the difference between an intern and an employee?

An employee performs work primarily for the company's benefit and is entitled to wages and protections under labor law. A genuine intern is primarily there to learn, with the educational experience outweighing the company's operational benefit. If an unpaid intern is doing the same productive work as a paid employee, regulators will often treat them as an employee owed back wages. The agreement should describe the learning objectives, not just the tasks.

Should an internship agreement include a confidentiality clause?

Yes. Interns frequently access internal systems, product roadmaps, customer data, and other sensitive information. A confidentiality clause, or a standalone NDA referenced by the agreement, protects that information during and after the internship. For interns who will contribute to products or research, an intellectual property assignment clause is equally important.

Can an internship lead to a job offer?

It can, but the agreement should state clearly that the internship does not guarantee future employment. Many programs are designed as a pipeline for full-time hiring, but promising a job, even informally, can create expectations and, in some cases, legal exposure. Keep any conversion to full-time employment as a separate, discretionary decision documented in a new offer.

Who owns the work an intern creates?

By default, ownership of work created by an intern is not automatically assigned to the company, especially for unpaid interns who are not employees. To secure ownership of code, designs, research, or other deliverables, include an explicit intellectual property assignment clause. Without it, the company may have only limited rights to use what the intern produced.

Internship Agreement: How to Write One

Draft an internship agreement clause by clause, paid vs. unpaid rules, the DOL primary beneficiary test, IP, confidentiality, and termination terms.

An internship agreement is the contract that defines the relationship between a company and an intern, what the intern will do, whether and how they'll be paid, who owns their work, and what happens when the internship ends. It protects both sides: the company secures its confidential information and work product, and the intern gets a clear picture of expectations, compensation, and learning objectives.

Internships also sit on a legal fault line. Get the paid-versus-unpaid question wrong and a for-profit employer can owe back wages, overtime, and penalties. This guide walks through the structure of a solid internship agreement, the rules that govern unpaid internships, every clause you should include, and the mistakes that most often create liability.

What is an internship agreement?

An internship agreement is a written contract between a host organization and an individual who will work, train, or gain experience with that organization for a defined period. It establishes the terms of the internship: duration, schedule, compensation (if any), supervision, confidentiality, and the educational goals of the arrangement.

Unlike a standard employment offer, an internship agreement usually emphasizes learning and development alongside the work itself. That framing isn't just about tone; for unpaid internships at for-profit companies, the educational nature of the program is what keeps it legal.

Internship agreements are used by startups, large corporations, nonprofits, government agencies, and academic programs. The exact terms differ, a paid software engineering internship looks very different from an unpaid nonprofit placement tied to course credit, but the core structure is the same.

Paid vs. unpaid internships: the rules that matter

This is the single most important decision in any internship agreement.

For-profit employers

Under the U.S. Fair Labor Standards Act (FLSA), interns at for-profit companies are generally considered employees entitled to minimum wage and overtime, unless the internship passes the Department of Labor's "primary beneficiary" test. Courts weigh seven factors, including:

Whether both parties understand there is no expectation of pay
Whether the internship provides training similar to what's offered in an educational environment
Whether it's tied to the intern's formal education (e.g., for academic credit)
Whether it accommodates the intern's academic calendar
Whether its duration is limited to the period of beneficial learning
Whether the intern's work complements rather than displaces paid employees
Whether both parties understand there's no promise of a paid job at the end

No single factor is decisive; regulators look at the whole picture. If the intern is the primary beneficiary, the internship can be unpaid. If the company is, the intern is an employee owed wages. Because the analysis is fact-specific, many for-profit employers simply pay their interns at least minimum wage to remove the risk entirely.

Nonprofits and government

Unpaid internships and volunteer arrangements are more readily permitted in the nonprofit and public sectors, but the agreement should still document the scope and the educational or charitable purpose.

Academic credit

Tying an internship to course credit strengthens the case for an unpaid arrangement, but credit alone does not automatically make it lawful. The primary beneficiary test still applies.

Key clauses in an internship agreement

1. Parties and effective date

Identify the company (full legal name and entity type) and the intern (full legal name). If the intern is a minor, note that a parent or guardian may need to sign; our guide on whether a minor can sign a contract explains why.

2. Position, scope, and learning objectives

Describe the role, the department, the supervisor, and, critically for unpaid internships, the learning objectives. Spell out the skills the intern will develop, not just the tasks they'll perform. This is what distinguishes an internship from ordinary employment.

3. Duration and schedule

State the start and end dates, the expected hours per week, and whether the schedule accommodates the intern's classes or exams. Internships are time-limited by nature; an open-ended arrangement looks like employment.

4. Compensation

If paid, state the hourly wage or stipend, the pay frequency, and overtime eligibility. If unpaid, state that explicitly and confirm that both parties understand there is no expectation of compensation. If the intern receives academic credit, reference the school program.

5. Supervision and mentorship

Name the supervisor and describe the support the intern will receive, training, feedback, mentorship. This reinforces the educational nature of the program and gives the intern a clear point of contact.

6. Confidentiality

Interns often see sensitive information. Include a confidentiality clause covering trade secrets, customer data, financials, and internal systems, or reference a standalone NDA. Our NDA contract template guide covers how to structure these obligations and make them enforceable.

7. Intellectual property assignment

If the intern will write code, design assets, conduct research, or create any deliverables the company needs to own, include an explicit IP assignment clause. Ownership does not transfer automatically, especially for unpaid interns who are not employees, so this clause is essential to secure the work product.

8. At-will and termination

State that either party may end the internship at any time, with or without notice. Include what happens on termination: return of company property, deletion of confidential materials, and final pay for any work already performed.

9. No guarantee of employment

Make clear that completing the internship does not guarantee a job offer. Any conversion to full-time employment should be a separate, discretionary decision.

10. Conduct and policies

Reference the company's code of conduct, anti-harassment policy, and any safety or workplace rules the intern must follow.

11. Governing law and signatures

Specify the governing state law and require signatures from both the company and the intern (and a guardian, if applicable).

How to write an internship agreement: step-by-step

Step 1: Decide paid or unpaid. Run the program against the primary beneficiary test. When in doubt, especially at a for-profit company, pay at least minimum wage.

Step 2: Identify the parties. Use full legal names and note any guardian requirement for minors.

Step 3: Define the role and learning objectives. Describe the work and the educational value. For unpaid internships, the learning component is your legal foundation.

Step 4: Set duration, schedule, and compensation. Be specific about dates, weekly hours, and pay (or the lack of it).

Step 5: Add the protective clauses. Confidentiality, IP assignment, and conduct policies protect the company's interests.

Step 6: Address termination and the no-guarantee provision. Make the at-will nature and the absence of a job promise explicit.

Step 7: Add governing law and signatures. Finalize with the right signatories, many teams use electronic signatures to execute quickly and keep a clean record.

Common mistakes to avoid

Misclassifying a paid role as an unpaid internship. The most expensive mistake. If an unpaid intern is doing productive work that benefits the company more than it benefits their education, you risk owing back wages, overtime, and penalties. When the program looks like a job, treat it like one.

Skipping the IP assignment clause. Companies routinely assume they own whatever an intern creates. They often don't. Without an explicit assignment, you may have only a limited license to the intern's work, a serious problem if the intern built something central to your product.

No confidentiality protection. Interns get access to internal systems and data, then leave in a few months. Failing to bind them to confidentiality leaves your sensitive information exposed.

Promising a job, even casually. Informal assurances of full-time employment can create expectations and complicate a later decision not to hire. Keep conversion discretionary and documented separately.

Treating interns differently from contractors without understanding the distinction. An intern is not the same as an independent contractor. If you actually need project work done by someone operating their own business, a 1099 independent contractor agreement is the right document, not an internship agreement.

Forgetting about restrictions on outside work. If the internship requires the intern to avoid conflicts of interest or competing roles, address it explicitly; the rules around restricting outside work are nuanced, as our piece on restricting employees from a second job explains.

When to use an internship agreement

Bringing on summer or semester interns at a company or startup
Hosting interns tied to a university or academic credit program
Onboarding unpaid interns at a nonprofit or government agency
Running a structured internship pipeline intended to feed full-time hiring
Any arrangement where someone works or trains with your organization and you need to define scope, pay, confidentiality, and IP ownership

Whenever a person will spend meaningful time inside your organization, seeing your data, using your systems, and producing work, a written internship agreement turns an informal arrangement into a clear, defensible relationship.

Related guides

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