Navigating Unpaid Internships: A Comprehensive Guide and Contract Template

An internship agreement is a legally binding document outlining the work arrangement between a company and a student intern. Internships offer students the opportunity to gain industry knowledge and contribute to a company's operations. These roles can be short-term or focused on training. A well-structured internship agreement sets clear expectations for both the intern and the company, fostering a positive and productive experience. It defines roles, responsibilities, and other critical terms, minimizing potential misunderstandings and disputes.

Understanding the Internship Agreement

An internship agreement is essential for formalizing the relationship between an organization and an intern. It serves as a roadmap, ensuring both parties understand their obligations and the scope of the internship. This agreement helps prevent legal issues and ensures the intern benefits from the program.

Key Components of an Internship Agreement

A comprehensive internship agreement should include the following elements:

• Internship Position, Duties, and Responsibilities: Clearly outline the intern's role and the tasks they will perform. Listing the core responsibilities expected from the intern during the program is a best practice.
• Duration: Specify the start and end dates of the internship. Internships typically last 10-15 weeks or the length of a college semester, but some may extend for an entire year or longer. The length of an internship placement depends on what is agreed between the employer and the intern.
• Compensation: State whether the internship is paid or unpaid.
  • Paid Internship: Specify the amount the intern will receive per hour, week, or month. Ensure you write a paid internship agreement to state the pay your intern will receive. You must pay an intern at least minimum wage if they’re an employee under the FLSA.
  • Unpaid Internship: Clearly state that the internship is unpaid and for educational/training purposes. The Parties agree that this internship is unpaid and that the Intern will not be compensated or paid for any services that he/she conducts at the Company.
• Work Schedule: Define the number of hours per week the intern will work and the agreed-upon schedule.
• Confidentiality: Include a confidentiality clause to protect the company's proprietary information. During the course of this Agreement, it may be necessary for the Company to share proprietary information, including trade secrets, industry knowledge, and other confidential information, with the Intern in order for the Intern to complete the Duties and Responsibilities. The Intern will not share any of this proprietary information at any time. The Intern also will not use any of this proprietary information for the Intern’s personal benefit at any time. All terms and conditions of this Agreement and any materials provided during the term of the Agreement must be kept confidential by the Intern, unless the disclosure is required pursuant to process of law.
• Intellectual Property: Address the ownership of any content or materials created during the internship. The Intern agrees that any content provided to the Intern by the Company in order to perform the Intern’s Duties and Responsibilities, including but not limited to, images, videos and text, copyrights or trademarks, is and will remain solely owned by the Company. The Intern agrees that any content provided by the Intern to the Company in the course of performing the Intern’s Duties and Responsibilities, including but not limited to, images, videos and text, copyrights or trademarks, is solely and legally owned by the Intern, but the Intern grants the Company a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any such content in connection with the Intern’s Duties and Responsibilities. Any materials developed by the Company, making use of the content, remains the sole property of the Company.
• Termination: Outline the conditions under which either party can terminate the agreement. Review your agreement’s rules for termination. Find out the required notice period and issue proper notice. Either party may terminate this Agreement at any time, with or without cause, by providing [Number] days’ written notice. Termination conditions of intern contracts depend on how the agreement is written up.
• Intern Relationship: Clarify that the internship does not create an employer-employee relationship. Nothing in this Agreement shall be construed to create an employer-employee or principal-agent relationship between the Intern and the Company.
• Compliance with Policies: State that the intern must comply with all company policies, rules, and procedures. Intern shall comply with all Company policies, rules, and procedures communicated during the internship.
• No Guarantee of Employment: Specify that the internship does not guarantee future employment. This internship does not guarantee future employment. Upon completion, any employment offer will require a separate agreement.
• Representations and Warranties: Include statements that both parties are authorized to enter into the agreement and that their obligations do not violate any third-party rights or laws. Both Parties represent that they are fully authorized to enter into this Agreement. The performance and obligations of either Party will not violate or infringe upon the rights of any third-party or violate any other agreement between the Parties, individually, and any other person, organization, or business or any law or governmental regulation.
• Indemnity: State that the Parties each agree to indemnify and hold harmless the other Party, its respective affiliates, officers, agents, employees, and permitted successors and assigns against any and all claims, losses, damages, liabilities, penalties, punitive damages, expenses, reasonable legal fees and costs of any kind or amount whatsoever, which result from the negligence of or breach of this Agreement by the indemnifying party, its respective successors and assigns that occurs in connection with this Agreement.
• Limitation of Liability:
• Severability:
• Waiver:
• Legal Fees:
• Legal and Binding Agreement: Affirm that the agreement is legally binding. This Agreement is legal and binding between the Parties as stated above. This Agreement may be entered into and is legal and binding both in the United States and throughout Europe.
• Governing Law and Jurisdiction: Specify the state or country whose laws govern the agreement. The Parties agree that this Agreement shall be governed by the State and/or Country in which both Parties do business.
• Entire Agreement: State that the agreement constitutes the entire understanding between the parties. The Parties acknowledge and agree that this Agreement represents the entire agreement between the Parties.
• Signature Block: Include spaces for both parties to sign and date the agreement.

Paid vs. Unpaid Internships: Legal Considerations

• Paid Internships: Paid internship agreements are common. Ensure you write a paid internship agreement to state the pay your intern will receive. You must pay an intern at least minimum wage if they’re an employee under the FLSA.
• Unpaid Internships: Unpaid internships are legal, but can be tricky. The laws are pretty strict about unpaid interns. Under federal law, there have been some recent changes over what counts as an “unpaid intern”. Unpaid interns who aren’t considered employees under the Fair Labor Standards Act (FLSA) don’t get the same protections, like minimum wage or overtime. All interns, regardless of pay status, may have some protection under state laws. School policies or company rules may also protect them.

The "Primary Beneficiary" Test for Unpaid Internships

The Department of Labor uses what it calls the “primary beneficiary” test. As the name suggests, the test is looking to make sure that it is the intern, NOT the company, that will be getting the most benefit out of the internship.

Here are the seven factors the Department of Labor looks at:

Read also: Understanding Unpaid Internship Laws

1. No Expectation of Payment: The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee-and vice versa.
2. Similar to Hands-on Training: The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
3. Tied to Degree: The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
4. Works with School Schedule: The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
5. Specific Period of Time: The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
6. Not Work You Would Have Hired an Employee to Do: The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
7. No Promise of a Paid Job at the End: The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Crafting an Effective Unpaid Internship Contract: Essential Clauses

After you set up the structure of your internship, do your interviews, and pick a candidate, the next step should be have a written contract in place. Like any written contracts, the purpose is to lay down expectations and obligations. It’s also a good thing to have in case anything breaks down (e.g., the intern comes back and argues that he was actually an employee). Here are must-haves in your unpaid internship contract:

1. Learning Objectives and Tasks:
   • Make it very clear that the internship is primarily to help the intern learn and obtain new skills.
   • List out (1) the tasks that the intern will perform, (2) the learning objectives, and (3) how those tasks align with those learning objectives.
   • Make clear who will mentor or supervise the intern during the internship.
2. Internship Duration:
   • Clearly state a definitive start and end date of the internship.
   • An internship should only last as long as the intern is learning. If the intern is in school, it should accommodate the intern’s school schedule or academic calendar.
3. School Credit Details:
   • If the intern will be receiving school credit, clearly state all the relevant details.
   • This can include details about how many credits the intern will receive, if there are any requirements like writing a paper or filling out a survey, etc.
4. Non-Employee Status:
   • Clearly state that the intern will not be replacing or be a substitute for any employee.
   • This means that the intern will not be responsible for doing any employee’s job duties. That doesn’t mean the intern can’t help out; it just can’t be where the intern is essentially doing the job of a paid employee.
5. Unpaid Acknowledgment:
   • Have the intern acknowledge that the internship is unpaid and that there is no paid job waiting at the end.
   • Have the intern acknowledge that the internship is unpaid, that the intern will not be an employee and that the intern will not be entitled to a paid job at the end of the internship.
6. Confidentiality Provisions:
   • Include confidentiality provisions or have the intern sign a separate non-disclosure or confidentiality agreement.
   • Even though you may not be paying the intern, you’ll likely be providing them access to confidential information about your business. It’s important to make sure you have them promise not to share or use your confidential information for any other purpose than their internship.

Modifying and Terminating the Agreement

To modify an internship agreement, you must document the changes in writing. Review your agreement’s rules for termination. Find out the required notice period and issue proper notice.

Internship Confirmation Letter

The internship confirmation letter is crucial as it helps to lock in the best talent as quickly as possible. If you wait too long to send the letter and contract, you may lose out to competitors. You want to keep your letter simple while highlighting the essential information of your intern program. Many organizations try to include much of the information from the internship contract in the internship confirmation letter. While there is some overlap between the two documents, it’s not necessary to double up on all of the elements.

Here is a sample letter that might be useful. All material in [brackets] is intended to be edited:

[Date]

Read also: Accounting Internship Benefits: Paid vs. Unpaid

[Intern Name]

[Intern Address]

[Intern City, State, ZIP]

Dear [Intern Name]:

[Company Name] is pleased to offer you the position of [department name] intern reporting to [Name of Supervisor], [Supervisor’s Title]. We are excited about the possibility of you interning with us for the [Fall 2024] semester from [Monday, September 16 through Friday, December 13, 2024].

Read also: Are Unpaid Internships Legal?

You will be expected to work at [location/work hours] for approximately 35-40 hours per week, barring scheduled academic commitments. Your pay rate will be [$X.XX per hour/week/month], less applicable taxes and standard deductions as required by law. Overtime pay will be consistent with applicable law and regulations, and must be approved in advance by your supervisor.

Your key responsibilities will include: As an intern at [Company Name], you will be required to follow all company policies, especially those that prohibit any employee from bringing with them from any prior employer any proprietary information, trade secrets, proprietary materials, or processes of such former employers. You will be required to sign the Employment Eligibility Verification (Form I-9). On your first day of work, please bring with you all of the documents that establish your identity and employment eligibility.

You should be aware that your employment at [Company Name] is part of an internship program and is expected to last no longer than the dates indicated above. Nothing herein, however, modifies your status as an express “at-will” employee. Under “at-will” employment, you are free to resign at any time, for any reason, with or without cause or notice. Similarly, the Company is free to conclude its employment with you at any time. The “at-will” employment status cannot be modified or amended except by written agreement signed by both you and a representative of the Company.

Unless otherwise notified by the Company, this offer for an internship is effective for [X business days] from the date of this letter. You are welcome to use any form you wish.

Sample Internship Agreement Template

This Internship Agreement (“Agreement”) is entered into on [Date], by and between:

Company: [Company Name], a [State/Country] company with its principal office at [Address] (“Company”),

and

Intern: [Intern Name], residing at [Address] (“Intern”).

1. Position and Duties

The Company agrees to engage Intern in the position of [Internship Title]. Intern agrees to perform the duties assigned, which may include:

[Duty 1]

[Duty 2]

[Duty 3]

2. Duration

This internship shall commence on [Start Date] and conclude on [End Date], unless terminated earlier in accordance with this Agreement.

3. Compensation

☐ Paid Internship: Intern will receive [Amount] per [hour/week/month].

☐ Unpaid Internship: This internship is unpaid and for educational/training purposes.

4. Work Schedule

Intern shall work [X] hours per week on a schedule agreed upon with the Company. Adjustments must be approved in advance.

5. Confidentiality

Intern agrees to maintain the confidentiality of all Company proprietary information and not disclose or use such information outside the scope of the internship.

6. Compliance with Policies

Intern shall comply with all Company policies, rules, and procedures communicated during the internship.

7. Termination

Either party may terminate this Agreement at any time, with or without cause, by providing [Number] days’ written notice.

8. No Guarantee of Employment

This internship does not guarantee future employment. Upon completion, any employment offer will require a separate agreement.

9. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State/Country of [State/Country].

tags: #unpaid #internship #contract #template

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