How to Hire an InternScope, pay, legal status, and conversion
An internship is the cheapest way to test a hire before you commit to one, and the easiest program in hiring to run badly. This guide covers what an intern should actually work on, what to pay them, when unpaid is legal and when it will get you sued, where to find students who want the job, how to screen candidates with no work history, and how to turn a good intern into a full-time employee.
Six steps to an internship that pays for itself
Scope a project
One deliverable with a real deadline
Set pay + status
Hourly, W-2, non-exempt
Post to schools
Handshake, career centers, niche boards
Screen for signal
Projects and curiosity, not experience
Run 10-12 weeks
Manager, weekly check-in, final demo
Convert or close
Offer, referral, or honest goodbye
Most first internships fail the same way. Someone on the leadership team decides an intern would be useful, a student starts in June, and by week three nobody can name what the intern is supposed to produce. The student spends the summer formatting spreadsheets and shadowing meetings, leaves with a polite reference, and the company concludes that interns are not worth the effort. The intern was fine. The scoping was the problem.
Done properly, an internship is the best-value hiring channel a small company has. You get ten weeks of real work at a fraction of a full-time salary, and a long, honest look at how someone thinks before you make a permanent bet on them. The numbers back this up. The conversion rate for 2024-25 interns hit 63.1%, the highest in five years, per NACE's 2026 Internship and Co-op Survey, with 88.3% of interns who got an offer accepting it. Compare that acceptance rate to a normal external offer and the case makes itself.
The mechanics are not complicated, but the legal side has teeth and the sourcing runs on a calendar you do not control. Everything below assumes you want a program you can repeat, not a one-off favor for a friend's kid. The same discipline that makes any junior hire work applies here: define the work first, run a structured interview instead of a friendly chat, and treat the candidate experience as part of the product, because students talk to each other more than professionals do.
Step 1
Scope one project, not a pile of tasks
Before anything else, write down what the intern will have finished on their last day. One sentence. If you cannot write that sentence, you are not ready to hire an intern, and no amount of good candidates will fix it.
A good intern project has three properties. It matters enough that someone would notice if it never got done, it is small enough to finish in ten weeks by someone who needs two of those weeks to get oriented, and it does not sit on the critical path of a customer commitment. That last one is the constraint people skip. Put an intern on something a client is waiting for and you will end up doing the work yourself at 10pm while the intern watches.
Real examples that work: rebuild the internal onboarding docs and test them on two new hires, run a competitive teardown of twelve products in your category and present the findings, clean and instrument the analytics events nobody has had time to fix, or write and ship a set of automated tests for one service. Each has an output somebody will use.
The manager test
Name the person who will spend three hours a week with this intern before you post the role. Not the team. A person. If nobody on your team has three hours a week to give, hire a contractor instead and revisit the internship next cycle.
Once you have the project and the manager, the posting writes itself. Describe the project, the tools, the team, and the pay, in that order. Students screen postings for whether the work sounds real, and a job ad full of generic responsibilities reads as a filing job. Our guide on writing job descriptions that attract candidates covers the structure, and it applies to intern postings with one change: lead with what they will learn, not with what you require.
Step 2
Get the legal status right before you post
This is where small companies get into trouble, usually with good intentions. The question the Department of Labor asks is simple: who is the primary beneficiary of this arrangement, the student or the business? If it is the business, the intern is an employee under the Fair Labor Standards Act and is owed at least the federal minimum wage of $7.25 an hour, whatever your state requires if it is higher, and overtime past 40 hours.
The DOL adopted the seven-factor primary beneficiary test in January 2018, following the Second Circuit's decision in Glatt v. Fox Searchlight Pictures. It replaced a rigid six-factor test where failing any single factor sank the program. The current version is flexible, which cuts both ways: no one factor saves you either.
The DOL seven-factor primary beneficiary test
No expectation of compensation is clearly understood by both sides
The training resembles what a school would provide, including hands-on instruction
The internship is tied to formal education through coursework or academic credit
The schedule accommodates the intern's academic calendar and commitments
The duration is limited to the period of useful learning, not open-ended
The work complements paid staff rather than displacing them
Both sides understand there is no promise of a paid job at the end
No single factor decides it. Courts weigh the whole picture. If your answer to most of these is shaky, the intern is an employee and owes at least minimum wage.
Read the full DOL Fact Sheet #71 before you commit to an unpaid program. Two things it does not say, which people assume: academic credit alone does not make an internship lawfully unpaid, and a signed agreement in which the student waives pay does not either. FLSA rights cannot be waived by contract.
My honest view is that the unpaid internship is not worth defending for most companies. The legal exposure includes back wages, liquidated damages, and state penalties, and the talent cost is worse. Unpaid programs filter for students who can afford to work for free, which quietly narrows your pipeline to a specific socioeconomic slice. Nonprofits and government agencies have more room here under different volunteer rules, but a for-profit company should just pay.
Classification is the second trap. A paid intern who works hours you set, on equipment you provide, under your direction is a W-2 employee, typically temporary and non-exempt. Paying a flat monthly stipend on a 1099 is misclassification, and it is common enough that state labor agencies look for it. If you are unsure where the line sits, our breakdown of contractor vs full-time employee walks through the control test in detail.
Step 3
Decide what to pay an intern
The national anchor is $23.04 an hour for bachelor's-degree-level interns, from NACE's 2025 Guide to Compensation for Interns and Co-ops. Worth knowing: adjusted for inflation, intern pay is slightly down over the past decade, so the headline number has grown more slowly than it looks.
That average is close to useless on its own, because field variance swamps it. A software intern at a mid-size tech company and a marketing intern at a regional agency are not competing for the same budget. Use the bands below as a starting frame and adjust for your metro.
What interns actually get paid (US, hourly)
Software, data, engineering
$28 - $45 / hr
Large tech employers push the top of this range and beyond
Finance, consulting, actuarial
$25 - $40 / hr
Often paid as a weekly salary for a fixed 10-week program
Overall bachelor's average
$23.04 / hr
NACE 2025 Guide to Compensation for Interns and Co-ops
Marketing, ops, HR, design
$17 - $22 / hr
Where most small business internships land
Nonprofit and public sector
$15 - $18 / hr
Frequently a fixed stipend rather than an hourly rate
Anchor figure: $23.04 average hourly wage for bachelor's-level interns (NACE, 2025). Field ranges reflect common posted rates and vary by metro.
Run the total number before you commit. A 12-week intern at $20 an hour, 40 hours a week, costs $9,600 in wages plus payroll taxes, a laptop or software seats, and roughly 36 hours of a manager's time. Call it $12,000 to $13,000 all in. That is the real budget line, and it is still a bargain against a bad full-time junior hire, which the research on the cost of a bad hire puts at multiples of salary once you count ramp time and replacement.
Two practical notes on structure. Housing stipends and relocation help are common at larger employers and rare at small ones, so if you are hiring locally, say so in the posting rather than losing a week to a candidate who assumed relocation was covered. And publish the rate. Several states now require pay ranges in job postings, students filter aggressively on compensation, and hiding the number gets your posting skipped in favor of the one that shows it.
If you plan to convert interns later, decide the full-time band now rather than improvising in October. Pay bands set in advance stop the awkward negotiation where a converted intern discovers they are being paid less than the person hired next to them from outside.
Step 4
Source on the university calendar
The single biggest sourcing mistake is timing. Summer internship recruiting at large employers runs from late August through December, with many offers out before winter break. If you post a summer role in April, you are fishing in a pool that the organized companies already picked over. Small companies can win late, but you win on speed and specificity, not on brand.
Where to actually post, in rough order of return for a company without a campus recruiting team:
- 01University career centers directly. Email the coordinator for the relevant department, not the general careers inbox. A named coordinator at one nearby school will send you better candidates than a national board, and they respond to small employers who show up consistently.
- 02Handshake, which most US colleges use as their job platform. Employer accounts are free to create and let you target by school, major, and graduation year.
- 03Department mailing lists and student clubs. The ACM chapter, the finance society, the design collective. These reach students who already opted into the field.
- 04Your own team's alumni networks. Someone on staff graduated from a school within driving distance in the last five years. Ask them to post it.
- 05Niche and field-specific boards where students in your discipline already look. A design internship posted on a design community board outperforms the same posting on a general board by a wide margin.
Two more channels worth building over time. Referrals from previous interns work well because students recommend employers who treated them properly, which is one more reason to run the program with care. And a standing relationship with two or three departments turns internship hiring into a talent pipeline rather than a scramble every spring. See our guide to niche job boards for the discipline-specific options.
One thing to skip: paying for premium placement on a general job board for an internship. Student applications are not the bottleneck. A well-written intern posting on a free channel will generate more applications than you can read. Your bottleneck is screening, which is the next problem.
Step 5
Screen when nobody has experience
Intern resumes look identical. Same degree, same GPA range, same two campus activities, same coursework section. Sorting by GPA is tempting and mostly useless. Google's own analysis, published through re:Work, found academic marks were a poor predictor of on-the-job performance a couple of years out of school, which is why they stopped asking for transcripts from most candidates.
What predicts a good intern is evidence of self-directed work and genuine curiosity about the thing you do. Those show up in artifacts, not credentials. A GitHub repo with three abandoned projects and one finished one beats a 3.9 with nothing attached. A cover note that mentions a specific product decision you made beats a template.
Worth an offer
- Built something outside of class, even small and rough
- Asks what the team is working on before asking about perks
- Can explain a project they did end to end, including what broke
- Applied to your company specifically, not to 200 postings
- Comfortable saying they do not know something
Pass, or dig deeper
- Resume is a list of coursework with no artifacts attached
- Cannot name a single thing they want to learn from the role
- Needs constant direction in a 30-minute conversation
- Treats the internship purely as a credential to collect
- Availability keeps shifting before the offer is even out
Keep the process to two conversations. A 20-minute screen to check interest, availability, and whether they can hold a conversation about their own work, then a 45-minute structured interview with the manager who will run the project. Ask every candidate the same questions and score them the same way. That consistency is what makes a comparison across ten students with no track record mean anything, and it is the core of what our guide to structured interviews lays out.
Three questions that reliably separate candidates at this level. What is something you built or figured out that nobody assigned you? Walk me through a project that did not work and what you would do differently. What do you want to be able to do at the end of the summer that you cannot do now? The third one is the most revealing, because a student with a real answer will drive their own internship and a student without one will wait to be told what to do.
Skip the take-home assignment unless it is under two hours and you pay for it. Students are juggling coursework, and a four-hour unpaid exercise for a twelve-week job is a bad trade that your best candidates will decline. If you need a work sample, use a short live exercise inside the interview. And move fast: intern candidates typically hold multiple offers with short fuses, so a process that drags past two weeks loses. The tactics in reducing time to hire apply directly.
Step 6
Structure the twelve weeks
Ten to twelve weeks is the standard length for a reason. It maps to a summer break, and it leaves eight or nine productive weeks after the ramp. Here is the shape that works.
Weeks 1-2
Orientation
Accounts, tools, a small first task that ships by Friday of week one. Nothing kills momentum like a week of reading docs with no output.
Weeks 3-9
The project
Weekly one-on-one with the manager, a written status update every Friday, and one mid-point review where scope gets cut if it needs to be.
Weeks 10-12
Land and present
Finish, document, and demo the work to the team. The presentation matters: it is how the rest of the company learns the intern is good.
The mid-point review is the part people skip and the part that saves programs. At week six, look at the actual pace and cut scope if the project will not land. An intern who finishes a smaller thing completely learns more and leaves you more value than one who gets 70% through something ambitious and hands over a half-built artifact nobody can use.
Onboarding deserves the same rigor you would give a full-time hire, compressed. Accounts provisioned before day one, a written project brief, an introduction to everyone they will need, and a named buddy who is not their manager. Our employee onboarding checklist covers the full sequence, and most of it applies unchanged.
Step 7
Convert the good ones, and close the rest cleanly
The whole point of a paid internship, from a hiring standpoint, is that it is a twelve-week working interview with no guesswork at the end. You have watched this person handle ambiguity, take feedback, and finish something. No interview loop gets you that.
Make the decision at week ten, not on the last day. If you want them, tell them before they leave and follow with a written offer. For a rising senior returning to school, that usually means an offer for the following summer or a start date after graduation, which is fine and standard. NACE's data showed offer rates climbing nearly 10% year over year, and an 88.3% acceptance rate among interns who got one, so a good intern who leaves without an offer is very likely being hired by someone else within the year. Get the offer letter right, including the start date and the full-time band you set back in step three.
If you are not making an offer, say so directly and kindly, and say why. Students almost never get real feedback, and the ones who get it remember the company that gave it. Offer to be a reference, connect them to someone in your network, and mean it. This is the cheapest employer brand work available: an intern you did not hire who speaks well of you is worth more than a job board ad.
Keep the good ones warm either way. A short note in December, an invite to a company event, a reply to their LinkedIn post. Two years later, when you have a junior opening, you already know who to call. That is a pipeline, and it costs nothing but attention.
The operational problem
Intern hiring breaks inboxes
One internship posting on Handshake and two university career centers will land 200 to 400 applications in a fortnight, from candidates whose resumes are close to indistinguishable. That volume is why intern hiring gets abandoned halfway. Somebody opens the folder, reads forty resumes, and quietly stops.
This is a sorting problem, and software handles it better than a Friday afternoon does. Prepzo scores incoming applications against what you actually said the project needs, surfaces the ones with real artifacts attached, and runs scheduling so a strong student is not sitting in your inbox for nine days while a bigger company closes them. Our overview of how to screen resumes faster covers the manual version if you would rather do it by hand.
The judgment stays yours. Deciding which student will grow into a good engineer is not something to hand to a model. What software should take off your plate is the reading, sorting, and calendar work around that decision, so the judgment gets spent on ten candidates who earned it instead of on four hundred PDFs.
Frequently Asked Questions
How much should I pay an intern in 2026?
The average hourly wage for a bachelor's-degree-level intern is $23.04, according to NACE's 2025 Guide to Compensation for Interns and Co-ops. That average hides a wide spread by field. Computer science, engineering, and finance interns sit well above it, often $28 to $45 an hour at larger employers, while marketing, communications, and nonprofit roles land closer to $16 to $20. A small business hiring its first intern in a lower-cost metro can usually pay $17 to $20 an hour and stay competitive, as long as the work is real and the posting says so.
Is it legal to hire an unpaid intern?
Sometimes, but the bar is high for a for-profit company. The Department of Labor uses a seven-factor primary beneficiary test, adopted in January 2018 after the Second Circuit's ruling in Glatt v. Fox Searchlight. It asks who gets the main benefit from the arrangement. If the intern does, and the internship is tied to their coursework, runs on an academic calendar, and complements rather than replaces paid staff, an unpaid internship can be lawful. If the intern is doing work you would otherwise hire someone to do, they are an employee under the Fair Labor Standards Act and owe minimum wage and overtime. My advice for almost every company: pay the intern and skip the legal risk entirely.
How long should an internship last?
Ten to twelve weeks is the standard for a summer program, and it works because it fits a university calendar and gives an intern time to ship something real. Anything under eight weeks and you spend most of the time onboarding. Anything past sixteen weeks and the work usually turns into unsupervised production work, which is exactly what makes an unpaid program illegal and a paid program boring. Part-time semester internships of 15 to 20 hours a week over a full term also work well for smaller teams.
Do I need to offer academic credit to hire an intern?
No. Academic credit is one factor in the DOL test, not a requirement, and it matters far more for unpaid programs than paid ones. If you are paying at least minimum wage, credit is optional and mostly a nice extra for the student. Note that the school, not you, decides whether an internship qualifies for credit, and many programs require a faculty sponsor and a learning agreement signed before the term starts. Ask the candidate early if credit matters to them, because the paperwork has deadlines.
What is a good intern conversion rate?
The conversion rate for 2024-25 interns reached 63.1%, the highest in five years according to NACE's 2026 Internship and Co-op Survey, with an acceptance rate of 88.3% among interns who received offers. If you are converting more than half your interns into full-time hires, your program is healthy. If you are converting almost none, the usual cause is that you never scoped the internship as a tryout for a real opening, so there was no job to offer at the end.
Should an intern be classified as an employee or a contractor?
An employee, in nearly every case. A paid intern who works your hours, uses your equipment, and follows your direction is a W-2 employee, and paying them on a 1099 to avoid payroll taxes is a misclassification the IRS and state labor agencies take seriously. Interns are usually classified as temporary non-exempt employees, which means hourly pay and overtime past 40 hours in a week. A flat stipend paid as contractor income is one of the most common mistakes small companies make with their first intern.
Keep Reading
More Prepzo Guides
- Contractor vs Full-Time Employee
Why a paid intern is a W-2 employee, not a 1099
- How to Hire Your First Engineer
Where a converted intern fits in an early team
- Employee Onboarding Checklist
Compress this into week one of an internship
- How to Build a Talent Pipeline
Turn one internship into a repeating junior channel
External Sources
- DOL Fact Sheet #71: Internship Programs Under the FLSA
The seven-factor primary beneficiary test in full
- NACE: Average Hourly Wage for Interns Exceeds $23
Current intern compensation benchmarks by degree level
- NACE: Intern Conversion Rate Hits Five-Year High
Offer, acceptance, and conversion benchmarks
- Google re:Work: Use Structured Interviewing
Why consistent questions beat GPA and gut feel
Four hundred intern applications, ten worth your time
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