An Internship Contract is a formal written agreement between an organization (the host employer) and an intern that establishes the terms, conditions, expectations, and legal parameters of the internship arrangement. This document is critically important because it defines whether the internship is paid or unpaid, which has significant legal implications under the Fair Labor Standards Act (FLSA, 29 U.S.C. Section 203). The U.S. Department of Labor uses a "primary beneficiary test" established in the Second Circuit's decision in Glatt v. Fox Searchlight Pictures (2015) to determine whether an intern qualifies as an employee entitled to minimum wage and overtime protections.

Under the seven-factor primary beneficiary test, courts examine whether the intern understands there is no entitlement to compensation, whether the internship provides training similar to an educational environment, whether the internship is tied to formal education through integrated coursework or academic credit, whether the internship accommodates the intern's academic calendar, whether the internship's duration is limited to the period of beneficial learning, whether the intern's work complements rather than displaces regular employees, and whether both parties understand there is no entitlement to a paid job at the conclusion. If the arrangement fails this test, the intern is legally an employee entitled to FLSA protections, including the federal minimum wage of $7.25 per hour and overtime pay.

The internship contract documents the parties' intentions and the nature of the arrangement, providing critical evidence in any subsequent wage and hour dispute. Many states, including California (AB 1066), New York, and Illinois, have adopted additional intern protection statutes that extend anti-discrimination and anti-harassment protections to unpaid interns, further increasing the importance of a written agreement.

An internship contract is essential whenever an organization brings on an intern, whether the position is paid or unpaid, full-time or part-time, for-credit or not-for-credit. The document should be executed before the intern begins any work.

Unpaid internships require the most rigorous documentation. If you are a for-profit company offering an unpaid internship, the contract must clearly demonstrate that the arrangement satisfies the DOL's primary beneficiary test. Without a written agreement establishing the educational nature of the internship, the organization risks a wage and hour claim. Major settlements in this area include the Hearst Corporation case (2016) and the Condé Nast class action, where interns successfully argued they were performing productive work without compensation.

Paid internships also need formal contracts. Even when compensation is provided, the contract documents the pay rate, work schedule, duration, supervisor assignment, and applicable policies. It prevents disputes over hours worked, overtime eligibility (most paid interns are non-exempt under the FLSA), and expected deliverables.

Academic internships coordinated with universities have specific requirements. Many academic institutions require a signed internship agreement as a prerequisite for granting academic credit. The contract typically must include learning objectives aligned with the student's curriculum, a designated supervisor, an evaluation process, and a minimum hour requirement.

Government agencies and nonprofits have more flexibility with unpaid internships under the FLSA, but a written contract remains best practice. Nonprofit organizations are not subject to the same primary beneficiary analysis as for-profit entities, but state laws may impose additional requirements. For example, New York Labor Law extends minimum wage requirements to for-profit interns but exempts nonprofits in certain circumstances.

A well-drafted internship contract should contain the following essential elements to protect both the organization and the intern.

The parties and term of the internship must be clearly identified: the organization's legal name, the intern's name, the start date, end date, and total expected duration. Open-ended internships create legal risk because the DOL's primary beneficiary test examines whether the duration is limited to a period of beneficial learning.

Compensation terms must be explicit. For paid internships, state the hourly rate, pay schedule, and overtime eligibility. For unpaid internships, include a clear statement that the intern understands and agrees that no compensation will be provided, and that the internship is primarily for the intern's educational benefit. Reference the FLSA and the primary beneficiary test factors.

Learning objectives and educational components distinguish a legitimate internship from unpaid labor. List specific skills the intern will develop, projects they will work on, training they will receive, and how these relate to their academic program. If academic credit is involved, identify the educational institution and the faculty advisor.

Work schedule and location should specify expected hours per week, the work location (on-site, remote, or hybrid), and any flexibility for the intern's academic schedule. Under FLSA rules, paid interns who are non-exempt must be compensated for all hours worked, including overtime beyond 40 hours per week.

Supervision and evaluation provisions identify the intern's direct supervisor, describe the mentorship structure, and establish evaluation milestones. Regular feedback sessions protect the organization by documenting the intern's performance and the educational nature of the experience.

Confidentiality and intellectual property clauses are important if the intern will access proprietary information or create work product. Under copyright law (17 U.S.C. Section 101), work created by an employee within the scope of employment is a work made for hire, but interns, especially unpaid ones, may not qualify as employees for this purpose. An explicit IP assignment clause resolves this ambiguity.

Anti-harassment and non-discrimination policies should be referenced or appended. Many states extend harassment protections to interns regardless of compensation status.