HR Tip of the Month – Primary Beneficiary Test

Employers should use a test — called the primary beneficiary test — when determining if a worker can be properly classified as an unpaid intern or if they need to be classified as an employee and paid at least minimum wage and overtime. Before hiring an unpaid intern, employers should consider the following:

  • The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee.
  • The extent to which 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.
  • The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  • The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  • The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  • The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  • The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

No single question will disqualify the worker from being classified as an unpaid intern. Instead, the employer should look at the answers as a whole. If in doubt, do not classify the employee as an unpaid intern.

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