May 1, 2019

Should Your Unpaid Intern Be Classified as an Employee?

young woman standing in front of four peers, with the word internship overlaid

Summertime is approaching fast, and we all know what that means: an influx of bored students with loads of extra free time. And, in proper summer tradition, you can expect that many of those students will be looking to earn a few bucks and/or gain experience in the working world during their academic hiatus.

For many owners and managers of private medical and dental practices, this might seem like a great opportunity to bring on a student intern — especially an unpaid intern — for help accomplishing some of those managerial or operational tasks that have been relegated to the back-burner for too long.

But, before you decide to invite your neighbor’s kid into your office and put them to work without offering compensation, there are a few things that you’ll need to consider.

Who benefits most from the arrangement?

In January of 2018, the Department of Labor (DOL) issued a revised set of criteria to help employers determine if an intern can be brought in to a business on an unpaid basis. The seven-factor test the DOL created includes questions about whether the employer or the intern are reaping the majority of the benefits from the agreement, whether the internship provides training similar to that which they might receive in an educational environment, and whether or not there is a promise of paid employment at the end of the internship.

You can review the seven-factor test put forth by the DOL in detail in our 2-Minute Trainer on Student Interns but, suffice it to say here that if the individual in question will be contributing to your company’s bottomline and performing work that is similar to work already performed by other employees at your practice, chances are good that they will qualify as an employee who must be paid, rather than as an intern — especially an unpaid intern.

If you are going to be using interns this summer (or under any circumstances) and believe that you fit into the “I don’t have to pay them” category, know that a number of high-profile lawsuits over the last couple of years have made the risks of doing so painfully clear. In this blog, we will cover the basics of how to assess your own program.

Does your “intern” come with an internship agreement?

One piece of the DOL’s determination of whether or not a student can be brought on as an unpaid intern includes making sure that there is a clear understanding between the employer and the intern that their tenure at your business comes with no expectation of compensation. That internship also needs to be tied to a formal education program (most typically the student is receiving academic credit for the experience in your office).

What this means is that an unpaid internship needs to be certified as legitimate by an educational institution and cannot be validated by any sort of informal agreement between intern and employer. Any unpaid internships at your practice, therefore, should be supported by a legally binding, written internship agreement.

Most colleges will provide their own internship agreements to employers in order to certify the relationship between your business, the intern, and the intern’s academic institution. Still, even when an intern or institution provides you with such an agreement, you will want to review it carefully to be sure that it doesn’t leave your practice vulnerable to potential legal claims (for more on exactly what to look for within that agreement, refer to our 2-Minute Trainer).

So, we busted your “unpaid-internship” bubble…

If you were planning to bring a student into your office this summer to work without pay but didn’t realize the level of consideration that went into such a decision, the reality of your legal obligations as an employer may be starting to set in right about now.

If your “intern” doesn’t meet all of the requirements of the DOL’s seven-factor test, or they don’t come with a formal internship agreement from a credible academic institution, chances are good that you’re dealing with a temporary employee rather than an intern. And, if this is the case, that employee is probably going to be subject to the requirements of the Fair Labor Standards Act, including entitlement to be paid at least minimum wage and to be paid overtime for hours worked in excess of forty per workweek (or eight per workday in Alaska and California).

Because of the temporary nature of such an employment situation, many employers think that a simple solution is to hire a seasonal student employee as an independent contractor. But this, too, could prove troublesome for your business if not handled correctly.

Familiarize yourself with employee and contractor classification criteria.

If you’re surprised that temporary low-level employees typically don’t qualify as independent contractors, you’re not the only one. Not only is this an issue that comes up frequently between CEDR Members and the advisors in our Solution Center, but it’s also one of the most common wage and hour violations investigated by the DOL.

To qualify as an independent contractor, a worker needs to pass a number of tests related to the relationship they have with the employer, how much control the worker has over how they perform their duties, as well as if those duties are commonly performed by other employees as part of your business.


For help determining if a worker qualifies as an independent contractor, contact the CEDR Solution Center or refer to The CEDR Guide to Employee Classification and Wage Compliance.


If there is any question as to whether or not a worker satisfies all of the requirements to be classified as an independent contractor, you’re much safer classifying them as an employee.

Though bringing an unpaid intern into your practice may be more complicated than you realize, it’s not impossible. But, if you’re set on doing so, make sure the goal is to provide a valuable educational experience for that intern rather than to have them complete busy work for your practice for free.

If that’s a commitment you are willing to make, consider reaching out to educational institutions in your area and letting them know that you are interested in supporting their students with internships that help them fulfill the requirements of their academic programs. Not only can it be helpful to have the extra set of hands at your practice, but participating in such programs also poses many benefits, such as creating future recruitment opportunities and strengthening your connections in your community.

If, on the other hand, you’re simply hoping to get a few tedious projects checked off of your to-do list, expect anyone you bring on to serve as a temporary employee and to be paid at least minimum wage — which is likely a small price to pay to increase productivity at your practice over the summer.

Friendly Disclaimer: This information is general in nature and is not intended to provide legal advice or replace individual guidance about a specific issue with an attorney or HR expert. The information on this page is general human resources guidance that is believed to be current as of the date of publication. Note that CEDR is not a law firm, and as the law is always changing, you should consult with a qualified attorney or HR expert who is familiar with all of the facts of your situation before making a decision about any human resources or employment law matter.

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Please note: CEDR Solutions specializes in providing expert HR support to owners and operators of independently owned medical and dental practices.