Student Interns: Not the Same as Free Labor

We all had to start somewhere. Offering an unpaid internship to a local student seems like a nice way to help someone gain valuable work experience and get a foot in the door of their chosen profession. And it’s certainly no hardship when your practice gets some free labor in the process, right? To many employers, this sounds like a great deal all around.

If only it were quite so simple! Before you take on an unpaid intern, you need to be certain that you comply with a specific set of legal requirements to avoid having to pay them as an employee. The Department of Labor (DOL) has identified seven factors to take into account when trying to decide if someone will be an intern or an employee.

This test is known as the “Primary Beneficiary Test,” because it is meant to help determine who is the primary beneficiary of the working relationship. If the primary benefits of the relationship go to the company, then it is most likely an employment relationship and the individual is going to be an employee. If the primary benefits go to the individual, then you should be able to take them on as an unpaid intern. This is because the relationship is set up to be of benefit to the intern.

Seven Factors to Weigh When Taking On an Unpaid Intern

thinking manager

  1. Whether there is a clear understanding between the intern and employer that there is no expectation of compensation.
  2. Whether the internship provides training similar to that which would be given in an educational environment, to include clinical or hands-on instruction.
  3. Whether the internship is tied to a formal education program by integrated coursework or the receipt of academic credit.
  4. Whether the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. Whether the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. Whether the work complements, rather than displaces, the work of paid employees.
  7. Whether the intern and employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

In this flexible, multi-factor test, no one factor makes the determination. Therefore, you should consider all of them. Again, the goal of the test is to determine which party is the primary beneficiary of the working relationship, the company or the individual.

If these factors indicate that the company would be the primary beneficiary of the relationship, then the individual should be paid as an employee, receiving at least minimum wage for all time worked.

Major lawsuits brought by unpaid interns have raised awareness among employers and unpaid interns as to the legal risks. More than ever, employers must be extremely careful that they are meeting the above DOL criteria and documenting the process each time they take on an intern. It is also important to be clear about employment status, or lack thereof, with the intern.

The best course of action is to get an internship agreement in writing. Most colleges will have their own. If you receive an agreement like this in the course of arranging an internship, be sure to review it carefully, and don’t be afraid to request changes. If you don’t receive one, contact the school your intern attends to find out if they have a standard agreement.

What Should You Look For in the Internship Agreement?

In addition to abiding by the DOL requirements, your internship agreement should clearly state all of the following:

  • The intern is not an employee of the practice, and there is no guarantee of employment at any time during or after the internship.
  • You have the right to remove the intern with or without cause (it’s okay if the college retains the right to review your decision, but make sure you can get the intern out of your office during any such review).
  • The college or university is liable for any negligence on behalf of the intern and will indemnify the practice against any claims.
  • The college will be responsible for any discipline needed.
  • The intern must sign your office’s confidentiality policy.

If you have questions about your internship agreement, email CEDR’s Solution Center at

You Are the Host, Not the Employer

Even though the new student intern needs to sign your confidentiality policy to protect your office and the patient data it handles, remember that you are NOT their employer. If there is a problem or if disciplinary measures are required, report it to the college for them to handle. This maintains the proper relationship between you and your intern and supports the fact that this internship is a part of their overall studies and training. (Of course, while disciplinary measures are not your jurisdiction, you do need to make sure your new intern has completed all appropriate HIPAA training before they come into contact with any of your patients’ Protected Health Information.)

Also, keep in mind that a few states, such as Oregon, have started introducing legislation that specifically protects interns from discrimination and/or gives them employment rights. So, if you have a question or are thinking about hosting an unpaid intern, make sure to check with CEDR first: email or call 866-414-6056.

The takeaway for hosting a student intern in your practice is simply to always make your decisions based on the DOL factors above, have an internship agreement in place, and fulfill anything else specific to your state. Under the right conditions, having an intern join your team for a season or two can be a rewarding experience for all parties involved.

That’s your Two-Minute Trainer! Now, go have a productive, harmonious, and lawsuit-free day.