In California, you generally do have to pay interns. State law treats anyone performing work for an employer as an employee entitled to at least the minimum wage, which is $16.90 per hour as of January 1, 2026.1California Department of Industrial Relations. Minimum Wage An internship can be unpaid only when it passes a strict legal test showing the intern, not the employer, is the one getting the real benefit. If it fails that test, the “intern” is an employee, and the employer owes full wages, overtime, meal and rest break premiums, and every other protection California labor law provides.
The Test That Decides Whether an Intern Can Be Unpaid
The Ninth Circuit, which covers California, uses the “primary beneficiary” test and has held that the same framework applies to both federal and California state wage claims.2Justia Law. Benjamin v. B&H Education, Inc., No. 15-17147 (9th Cir. 2017) The question is simple to state: who actually benefits more from the arrangement? If the intern gains meaningful education and training that outweighs the productive work the employer gets, the internship can be unpaid. If the employer comes out ahead, the intern must be paid.
Courts weigh seven factors, none of them controlling on its own:3U.S. Department of Labor. Fact Sheet 71 – Internship Programs Under The Fair Labor Standards Act
- Both sides clearly understand there is no expectation of pay. Even an informal implied promise of compensation cuts against unpaid status.
- The internship provides training comparable to what the intern would get in a classroom or vocational program.
- The internship is tied to the intern’s formal education through integrated coursework or academic credit.
- The schedule fits the intern’s academic calendar rather than treating them like a regular employee on a fixed shift.
- The internship lasts only as long as the intern is actually learning, not indefinitely.
- The intern’s work complements, rather than displaces, paid employees.
- Both sides understand there is no promise of a paid job at the end.
Displacement is the factor employers stumble on most often. When an intern spends most of their time doing the same tasks as entry-level staff without meaningful mentorship layered on top, the arrangement looks less like education and more like free labor.
One Wrinkle on the State Side
The California Division of Labor Standards Enforcement has never formally adopted the primary beneficiary test. Its last published guidance, a 2010 opinion letter, uses an older six-factor analysis that asks, among other things, whether the employer derives “no immediate advantage” from the intern’s activities. Because the DLSE could still apply that older, stricter standard in an enforcement action, cautious employers try to satisfy both tests.
What You Owe an Intern Who Counts as an Employee
If the internship fails the test, the intern is entitled to everything a regular worker gets. That starts with the $16.90 state minimum wage, but many California cities set higher floors. Several Bay Area cities require rates between $17.50 and $18.95 per hour for 2026.4County of San Mateo. 2026 Minimum Wage Reference Chart Certain industries also have higher minimums, including a separate $20.00 floor for fast food restaurant employees. Pay whichever rate is highest.
Overtime
California’s overtime rules go further than federal law. An intern classified as an employee earns one and a half times the regular rate after eight hours in a single day, after 40 hours in a workweek, and for the first eight hours worked on a seventh consecutive workday in the same workweek. The rate jumps to double time beyond 12 hours in a day, or beyond eight hours on that seventh consecutive day.5California Legislative Information. California Code LAB 510
Meal and Rest Breaks
A paid intern must get a 30-minute meal break before the fifth hour of work. If the whole shift is six hours or less, both sides can agree to waive it. A second meal break kicks in after ten hours and can be waived by mutual agreement if the shift stays under 12 hours and the first break wasn’t waived.6California Department of Industrial Relations. Meal Periods
Rest breaks are also required: a paid 10-minute break for every four hours worked, or major fraction of that. Miss a required meal or rest break and you owe one extra hour of pay at the employee’s regular rate for that workday. The penalty is capped at one hour per type of break per day, not one hour per missed break, so two missed rest breaks in a single day still produce one hour of premium pay, not two.7California Department of Industrial Relations. Rest Periods/Lactation Accommodation
What Protects an Intern Even When the Internship Is Legitimately Unpaid
An unpaid internship is not a legal gray zone where ordinary workplace protections disappear. California’s Fair Employment and Housing Act explicitly covers unpaid interns and volunteers. Under Government Code Section 12940, it is illegal to discriminate against an unpaid intern based on race, sex, gender identity, sexual orientation, age, disability, religion, national origin, or other protected characteristics.8California Legislative Information. California Code GOV 12940
Harassment protections apply too. An employer can be held liable for harassment of an unpaid intern by supervisors, coworkers, or non-employees if it knew or should have known about the conduct and failed to take corrective action. The assumption that an off-payroll intern creates less legal exposure is simply wrong.
Nonprofits, Government, and the For-Profit Boundary
The primary beneficiary test governs for-profit employers. Nonprofits and public agencies work under a different framework: the Fair Labor Standards Act allows people to volunteer for religious, charitable, and civic organizations as long as the arrangement is genuinely voluntary.9U.S. Department of Labor. Fair Labor Standards Act Advisor – Volunteers For-profit businesses cannot use this exception at all. Under the FLSA, employees may not volunteer services to a private for-profit employer.
Even for nonprofits, the arrangement has limits. The volunteer must act freely, without pressure. Assigning a regular schedule, requiring the person to perform core revenue-generating work, or creating an implicit expectation of future employment blurs the line between volunteer and employee quickly.10U.S. Department of Labor. Wage and Hour Division Fact Sheet 14A – Non-Profit Organizations and the Fair Labor Standards Act State and local government agencies can also accept volunteers for public service, but the same voluntariness requirement applies.
What Misclassification Actually Costs
Calling someone an unpaid intern when the relationship is really employment creates exposure on several fronts at once.
The first layer is all unpaid wages, including minimum wage shortfalls and overtime. California Labor Code Section 1194 lets the worker recover those amounts in court, plus interest and reasonable attorney’s fees.11California Legislative Information. California Code LAB 1194
Waiting time penalties under Labor Code Section 203 add up fast. If the employer willfully fails to pay final wages when the relationship ends, the penalty runs at the worker’s daily rate for each day wages remain unpaid, up to 30 days.12California Legislative Information. California Code LAB 203 For a full-time intern at $16.90 per hour, that 30-day cap alone exceeds $4,000, before touching the underlying unpaid wages or overtime.
Meal and rest break violations stack another hour of premium pay onto every workday a break was missed. Over a 10 or 12 week summer internship, those premiums compound. Because misclassified interns were never set up on payroll in the first place, employers typically face additional penalties for failing to provide accurate wage statements and for not maintaining required employment records.
Payroll Taxes Once You Pay an Intern
Once an intern is an employee, you have the same tax withholding obligations as with any other hire: federal income tax, Social Security at 6.2%, Medicare at 1.45%, the employer’s matching share of Social Security and Medicare, and California state income tax.
A narrow exception exists for students employed by the school, college, or university where they are actively enrolled. In that situation, FICA taxes do not apply to the student’s wages, provided education rather than employment is the predominant purpose of the relationship.13Internal Revenue Service. Student Exception to FICA Tax This exception does not help a private company that hires an intern from a local university. It applies only when the school itself is the employer.