An internship agreement documents the terms of a structured work experience between an organization and an intern. It protects the employer from legal claims about unpaid labor, sets clear expectations for both parties about duties and schedule, and confirms the training-focused nature of the experience. For universities, internships that lack a formal agreement may not qualify for academic credit. FreeContract generates a professional internship agreement in seconds, whether the role is paid or unpaid.

Internship Agreements — Legal Requirements, Paid vs. Unpaid, and Best Practices

An internship agreement is a foundational document for any structured work experience, and failing to have one in place exposes employers to significant legal risk — particularly for unpaid internships at for-profit companies.

The most important legal issue surrounding internships is the distinction between paid and unpaid arrangements. In the United States, the Department of Labor applies the "primary beneficiary test" to determine whether an unpaid intern is legally an employee entitled to minimum wage and overtime. This seven-factor test asks, among other things, whether the internship provides training similar to an educational environment, whether the experience benefits the intern rather than displacing regular employees, and whether both parties understand the internship is unpaid. An internship agreement alone does not legalize an unpaid arrangement — the actual conditions of the internship must meet these standards. For nonprofit organizations and academic programs, different rules may apply. Employers should consult an employment attorney before establishing any unpaid internship at a for-profit company.

For paid internships, the agreement is more straightforward but still essential. It should cover the hourly rate or stipend, the payment schedule, whether the intern is classified as an employee (subject to W-2, withholding, and workers' compensation) or an independent contractor (unusual for interns and generally not recommended), overtime policy, and any benefits such as transportation stipends or housing allowances.

Key clauses in any internship agreement include: a clear description of duties and the educational purpose of the experience; the start and end dates and the schedule (days, hours, and whether remote or on-site); supervision arrangements and the name or title of the supervisor; a confidentiality clause requiring the intern to protect the company's proprietary information and client data; and an IP clause addressing who owns any work product created during the internship — typically the company for paid internships, and often more nuanced for unpaid academic internships where the university may have an interest.

For internships that will be used to satisfy academic credit requirements, the agreement should reference the academic institution's requirements and include language confirming that the internship meets those criteria. Some universities require tri-party agreements signed by the student, employer, and university.

A well-drafted internship agreement also sets expectations for performance evaluation, attendance, professional conduct, and the conditions under which the internship can be terminated early by either party. Clarity on these points prevents misunderstandings and ensures a positive experience for the intern and the employer alike.

For any unpaid internship at a for-profit company or any internship in a regulated industry (finance, healthcare, law), have the agreement reviewed by an employment attorney before the program begins.