Client: “We have a student who wants experience, and we were thinking of bringing them in as an unpaid intern. We’ve also tossed around calling a few roles ‘volunteer’ positions to help with staffing. That should be okay as long as everyone agrees, right?”
Consultant: Be careful! Organizations can get themselves in trouble fast. A person is not automatically an unpaid intern or a volunteer just because everyone uses that label. If the person is really functioning like an employee, wage and hour laws may treat them like one. Under federal law, for-profit employers generally must pay employees, and unpaid internships at for-profit organizations are evaluated using the U.S. Department of Labor’s “primary beneficiary” test. (DOL)
Client: “Okay, so what makes an unpaid internship legitimate?”
Consultant: For a for-profit organization, the question is whether the intern is the primary beneficiary of the relationship. The Department of Labor points to seven factors, including whether there is a clear understanding there is no expectation of pay, whether the internship looks like an educational experience, whether it is tied to coursework or academic credit, whether it works around the academic calendar, whether it is limited to the learning period, whether the intern complements rather than displaces paid staff, and whether there is no entitlement to a paid job at the end. No single factor controls, and the analysis depends on the full picture.
Client: “So if they’re mostly helping us catch up on filing, answering phones, or covering regular work, that’s probably not great?”
Consultant: Correct. Once the “internship” starts looking like free labor for work you otherwise would assign to employees, your risk goes up. One of the biggest warning signs is when the intern is doing productive work that replaces or reduces the need for paid staff rather than receiving a structured learning experience.
Client: “What about nonprofits or public organizations? Can they use volunteers more freely?”
Consultant: They have more flexibility, and there are still rules. Federal guidance recognizes true volunteers in charitable, religious, civic, humanitarian, and public-service settings when the service is offered freely and without expectation of compensation. The guidance also says volunteers typically should not displace regular employees or perform work that would otherwise be done by regular workers.
Client: “That sounds promising. We are a non-profit. Could we have an existing employee volunteer a few extra hours in the same department?”
Consultant: That is one of the classic traps. Federal guidance says paid employees of a nonprofit and public agencies generally cannot “volunteer” to do the same type of services for their employer on an unpaid basis.
Client: “What if the person says they don’t mind not getting paid because they just want experience?”
Consultant: Intent helps explain the relationship, and it does not override the law. A friendly agreement does not make an unlawful unpaid arrangement lawful. If the role functions like a job, the organization may owe wages regardless of what the person agreed to. That is why structure matters so much.
Client: “What should we be asking before we launch any internship or volunteer role?”
Consultant: Start here:
- Who primarily benefits from the arrangement—the learner or the organization?
- Is there a real educational component with defined learning goals?
- Is it tied to a school program, academic credit, or a training plan?
- Is the work limited in duration and built around learning?
- Are we avoiding using this person to fill a staffing gap?
- If this is called a volunteer role, is it truly voluntary and appropriate for our organization type?
- Is this person already our employee doing the same kind of work?
If those answers get fuzzy, the safer path is often to make it a paid role.
Client: “We’re in Oregon. Is there anything else we should keep in mind?”
Consultant: Yes. Oregon BOLI says bona fide internships and training programs may be exempt from minimum wage and overtime requirements, and civil rights protections still apply. BOLI also says that student learners whose work experience does not meet the criteria for trainee status are employees entitled to the full protections of Oregon wage laws. That means the label matters far less than the facts. (Oregon)
Client: “So the real lesson is don’t use ‘intern’ or ‘volunteer’ as a budget strategy?”
Consultant: Exactly. “Unpaid” is not a shortcut. It is a classification decision with real legal consequences. When organizations get this wrong, the risk can include unpaid wages, overtime exposure, recordkeeping issues, and a messy explanation for why someone doing real work was never treated like an employee in the first place. The better approach is to design the role intentionally, document the purpose, and pressure-test it before the person starts. (DOL)
Client: “That makes sense. So the key is to evaluate the relationship, not just the title?”
Consultant: Exactly. If it is truly a learning experience, build it that way. If it is really work that helps your organization operate, pay for it accordingly. Clear planning on the front end is much easier than cleaning up a misclassification problem later.
And if you need help reviewing an internship idea, pressure-testing a volunteer model, or deciding whether a role should really be paid, we’re here to help. Reach out anytime.