Are Internships Considered Employment? Understanding the Nuances

Navigating the transition from academic life to the professional world can be challenging. Internships are often seen as a crucial stepping stone, providing students and recent graduates with invaluable experience. But are internships considered employment? This article delves into the complexities of internships, exploring their role, legal considerations, and how they can be leveraged as work experience.

The Role of Internships

Internships serve as a bridge between college and career, offering opportunities to gain applied experience, develop social capital, explore career fields, and build professional connections. For employers, internships are a valuable recruiting mechanism, allowing them to guide and evaluate potential entry-level candidates.

The National Association of Colleges and Employers (NACE) emphasizes that an internship should be a structured learning experience, not merely a means to advance the employer's operations or replace regular employees. Key components of an internship, according to NACE, include:

A real-world opportunity to apply classroom knowledge.
Transferable skills and knowledge applicable to other employment settings.
A defined start and end date, aligned with academic schedules.
A clear position description outlining responsibilities and qualifications.
Defined learning objectives that support academic and institutional goals.

The Importance of Internships

Internships are vital for both job seekers and employers. For students and recent graduates, internships provide avenues to increased skills, expanded networks, and enhanced social capital. NACE research indicates that work-based experiences lead to more job offers.

For employers, internships are a primary recruiting tool for entry-level college graduates. Many companies strive to convert interns into full-time employees, making internships an extended evaluation period.

Paid vs. Unpaid Internships: A Critical Distinction

While many internships are paid, the issue of unpaid internships remains a contentious one. NACE advocates for all internships to be paid, arguing that "all work should be paid" and that unpaid internships can hinder workforce diversity.

Research by NACE has demonstrated that students who participate in paid internships receive more job offers and higher starting salaries compared to those in unpaid internships. This disparity can persist and grow throughout a career. Furthermore, certain demographic groups, including women, Black, and Hispanic students, are often overrepresented in unpaid internships and underrepresented in paid ones.

Legality of Unpaid Internships

Unpaid internships are legal in certain situations, primarily determined by the Department of Labor's Primary Beneficiary Test (PBT). According to the FLSA, the PBT outlines whether the intern or the employer primarily benefits from the arrangement. If the intern is the primary beneficiary, they must be paid, unless the organization is a not-for-profit or government agency.

Non-profit organizations and government agencies can offer unpaid internships, but NACE encourages these entities to compensate interns in some form. This investment reflects a commitment to developing and diversifying the future workforce.

Academic Credit vs. Pay

The PBT does not explicitly state that academic credit is compensation. NACE argues that academic credit alone is insufficient compensation and should not justify an unpaid internship. Earning academic credit should not preclude students from also receiving fair compensation for their labor.

Read also: Unlock summer legal internships

Career Center Policies on Unpaid Internships

Career centers face the decision of whether to post unpaid internship positions. NACE encourages career centers to consider how to reduce the practice of unpaid internships. To determine whether to post an unpaid internship, career centers should weigh the value of the internship in helping students explore career paths, develop professional networks, and confirm their career goals against the time and labor required. Career centers should have very high expectations for the unpaid internships they choose to post.

Supporting Students in Unpaid Internships

NACE encourages career centers to organize funding streams to support low- and unpaid internships. Some institutions offer stipend programs, but these are often competitive and limited. Such programs can efficiently provide financial assistance to interns.

Federal Legislation and Intern Protection

NACE supports federal legislation to protect interns, advocating for the Federal Intern Protection Act to extend legal protections to unpaid interns in the federal government and to prohibit discrimination against unpaid interns in the private sector.

Diversity and Paid Internships

Internships are a key recruiting tool for employers seeking entry-level college graduates. Paid internships can improve diversity in the workplace, as employers often convert interns into full-time employees. Research indicates that white, male, and continuing-generation students are disproportionately represented in paid internships, highlighting the need for equitable access to paid opportunities.

Legislative action that revises or rejects the PBT and mandates pay for interns could bring more equity to the internship space.

Internships as Work Experience

Many students and recent graduates rely on internships to gain a foothold in the workforce. Internships are a sneak peek into the real world of work. It’s a short-term professional experience where students or recent graduates can apply what they’ve learned in the classroom to actual projects and tasks at a company or organization. It’s a training ground where you build skills, make valuable connections, and test-drive a potential career path-all while adding experience to your resume.

Are Internships Considered Real Work Experience?

Yes, internships are considered real work experience. Employers and recruiters view internships as legitimate professional experience, especially if the internship was with a well-known company or in the student's target industry. Internships at recognizable brands can carry significant weight, while smaller companies or startups often provide opportunities to take on meaningful responsibilities.

Recruiters value internships because they demonstrate that a candidate has been in a real work environment and has begun developing essential soft and hard skills.

How to Present Internships on a Resume

An internship experience can be listed in the "work experience" section of a resume, formatted just like a regular job. The key is to highlight accomplishments and contributions, focusing on the impact made and skills gained.

For example:

Marketing Intern
- ABC Company, San Francisco, CA
- June 2024 - August 2024
- Created and executed social media campaigns that boosted engagement by 20%.
- Collaborated with a team to develop marketing materials for new product launches.

Even a short-term summer internship counts as work experience. Paid internships are generally more structured and competitive. Data from NACE consistently shows that paid interns are more likely to secure job offers after their internship than unpaid interns. That said, unpaid internships are still valuable! Many industries, such as non-profits, arts, or media, offer unpaid internships, especially to students. Recruiters know this and won’t discount your unpaid experience if it’s relevant and hands-on. Regardless of whether you were paid or not, what matters most is what you achieved and learned during the internship.

Internships as a Pathway to Full-Time Employment

Internships often lead to full-time job offers, especially at major firms. Many companies use internships as extended interviews, evaluating skills and assessing cultural fit. Performing well as an intern can result in a full-time job offer or a strong network of connections.

Internships help bridge the gap between studies and securing a full-time job, which can be particularly beneficial for international students navigating a new job market.

Overcoming Challenges for International Students

Internships can help knock down many of these barriers! It shows you’re proactive and already have a foot in the door. At Intrax Global Internships, we remove those complications. We connect top international talent with the best internship opportunities in the United States, offering visa support and facilitating hiring across borders. We can support you and your host company when it comes to securing your J-1 visa. If you don’t have an internship offer yet, you can use our exclusive job board to search internships that might not be advertised publicly. We partner with some of the most influential and impactful tech companies, non-profits, hospitality businesses, and more. Whatever your internship focus, we can help you find the perfect opportunity to kickstart your career!

Tips for Maximizing the Impact of an Internship

To ensure that future employers recognize the value of an internship, it's crucial to present the experience effectively. When listing an internship on a resume, treat it like any other job, highlighting responsibilities and skills gained.

Use bullet points to highlight accomplishments: Focus on what you achieved, not just what you were “responsible for.”
Include keywords from job descriptions: Tailor your resume by mirroring keywords and skills that employers in your industry are looking for.
Showcase relevant tools and technologies: Mention specific software or tools used during the internship.

Leveraging Internships in Job Interviews

An internship is a goldmine of stories and examples that can be used to shine during interviews.

Use the STAR method: Structure answers using the Situation, Task, Action, Result framework based on internship experiences.
Highlight transferable skills: Point out universal skills gained like teamwork, communication, project management, or problem-solving.
Talk about challenges you overcame: Employers love hearing how you navigated real-world problems or learned something new on the job.
Be specific: If your internship was at a well-known company or with a respected brand, don’t be afraid to name-drop!

During the internship, keep notes about specific situations, achievements, and challenges to easily recall them during future job interviews.

Networking and Career Progression

An internship doesn’t end when your final day at the office does. Whether you’ve interned at a major corporation or participated in a startup internship, those months spent working on real-world projects, learning new skills, and collaborating with a team are exactly what employers want to see on your resume.

For international students and graduates, internships are even more powerful.

Legal Considerations

The Equal Employment Opportunity Commission (EEOC) addresses the issue of whether interns qualify as employees under EEOC-enforced laws. For unpaid or volunteer interns, coverage as an employee likely depends on whether the intern receives "significant remuneration" in some form, such as a pension, group life insurance, workers' compensation, or access to professional certifications.

Benefits that courts have not deemed significant include academic credit, practical experience, and scholarly research. However, even without significant remuneration, unpaid interns may be considered employees if the volunteer work is required for regular employment or regularly leads to paid employment with the same institution.

Paid interns are not volunteers and have different considerations. Courts weigh all aspects of the intern's relationship with the employer, focusing on whether the employer controls the means and manner of the intern's work performance.

Factors favoring coverage as an employee include:

The employer's right to control when, where, and how the worker performs the job.
The lack of skill required to perform the work.
The employer's provision of tools, materials, and equipment.
The work being performed on the employer's premises.
A continuing relationship between the parties.
The employer's right to assign additional projects to the intern.
The employer's authority to set the hours of work and duration of the job.
Payment of the intern by the hour, week, or month, rather than by the job.
The intern's failure to hire and pay assistants.
The intern's performance of work that is part of the employer's regular business.
The employer being in business.
The intern's lack of her own distinct occupation or business.
The employer's provision of employee benefits such as insurance, leave, or workers' compensation.
The employer treating the intern as an employee for tax purposes.
The employer's authority to fire the worker.
The parties' belief that they created an employer-employee relationship.

Other factors may also be considered, such as whether the primary role of the paid intern is as a student.

Paid Interns as Employees: Key Considerations

Paid interns are employees and are entitled to the same protections as other employees, including those under the Fair Labor Standards Act (FLSA) and state wage and hour laws. This encompasses protections such as meal and other breaks, and overtime wages.

Applicable large employers (ALEs) are generally required to offer employees who work at least 30 hours/week the opportunity to enroll in employer-sponsored health group insurance coverage after 90 days of full-time employment.

There are two exceptions under the ACA to keep in mind for paid interns: seasonal employees, and employees who work less than 30 hours per week.

Paid interns are likely to be classified as non-exempt hourly employees.

Stipends vs. Wages

Most interns must be paid at least the applicable minimum wage for all hours worked. Under very limited circumstances, a company may participate in an unpaid educational internship program. You should make sure you understand applicable federal and state laws, and consult with your legal counsel before rolling out an unpaid internship program.

Employers sometimes think of stipends when it comes to interns, and want to provide a weekly stipend rather than regular wages. This arrangement only works in limited circumstances. If your company is participating in an unpaid educational internship program, you may be able to provide an expense reimbursement stipend under limited circumstances.

It’s important to know that a stipend generally cannot be paid in place of regular wages. Paid interns are W-2 employees and are entitled to be paid at least the applicable minimum wage for all hours worked. While you can reimburse a paid intern for food or travel expenses, provided they give you receipts, it's generally not a good idea to provide such reimbursement by way of an upfront flat stipend.

Compensation and Benefits

Paid interns must be paid at least the applicable minimum wage for all hours worked and overtime wages, if they work overtime. Whether to pay an intern more than the minimum wage depends on market conditions, affordability, and the value of the work performed.

An intern who continues to work full-time after 90 days may become eligible for benefits. However, a continued internship could likely involve less than 30 hours of work per week.

The Primary Beneficiary Test

The Department of Labor Wage and Hour Division uses seven factors to determine whether an intern or student is actually an employee under the FLSA:

The extent to which the intern and the employer clearly understand that there is no expectation of compensation.
The extent to which the internship provides training similar to that given in an educational environment.
The extent to which the internship is tied to the intern’s formal education program.
The extent to which the internship accommodates the intern’s academic commitments.
The extent to which the internship’s duration is limited to the period in which it provides beneficial learning.
The extent to which the intern’s work complements, rather than displaces, the work of paid employees.
The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion.

If analysis of these circumstances reveals that an intern or student is actually an employee, then he or she is entitled to both minimum wage and overtime pay under the FLSA.

Other Types of Experiential Learning

Experiential learning encompasses various work-based experiences that build on academic learning. Cooperative education programs (co-ops) provide students with multiple periods of work related to their major or career goal. Apprenticeships combine paid on-the-job training with classroom instruction, preparing workers for highly skilled careers.

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