A founder I know in Fort Lauderdale ran a tidy little e-commerce operation out of a shared office near the Flagler Arts and Technology Village. Smart guy, genuinely good intentions, and he’d taken on three interns from a nearby college every semester for three years running. They helped with social media, product photography, and a little light copywriting. He never paid them. He offered “experience,” a LinkedIn recommendation, and, every Friday, a catered lunch. He thought he was doing them a favor. Then one former intern — annoyed about something unrelated to the internship — mentioned the arrangement to an employment attorney friend. What followed was eighteen months of back-and-forth with the Department of Labor, legal fees that crested forty thousand dollars, and a settlement that included back wages calculated at Florida’s minimum wage for every hour those interns had ever worked. The catered lunches were not a credit.
This story is not unusual. Across Florida’s startup corridors — from the tech incubators clustered around Naples to the agency districts of Fort Lauderdale — unpaid internship arrangements get structured by founders who are thoughtful about their product and careless about their paperwork. The rules around paying interns are not especially complicated once you read them carefully, but most founders never do. They rely on a folk understanding of intern law that is, in almost every meaningful detail, wrong.
The controlling federal framework comes from the Fair Labor Standards Act, and the Department of Labor applies what it calls the “primary beneficiary test” to determine whether an intern is, legally speaking, an employee who must be paid at least minimum wage. The test has seven factors, and no single factor is decisive — courts weigh the totality. But a few of those factors do most of the work in practice. The first is whether the internship provides training similar to what the intern would receive in an educational environment. The second is whether the internship is tied to a formal education program. The third — and this is where most founders stumble — is whether the intern’s work displaces regular employees. If your unpaid intern is doing the work your last part-time hire used to do, you almost certainly have an employee, not an intern, regardless of what the offer letter says. You can read the full breakdown of those seven factors directly on the Department of Labor’s Wage and Hour Division fact sheet, and if you are currently running an internship program without having done so, stop reading this and go there first.
Florida adds its own layer. The state minimum wage in 2024 sits at $13 per hour, moving to $14 in September 2024 under the incremental increases mandated by Amendment 2, passed by voters in 2020. If an intern is legally an employee and you have been paying them nothing, your back-wage liability accrues at the state rate, not the federal floor of $7.25. That difference matters when you’re calculating what three semesters of unpaid social media work actually cost you in a settlement.
What frustrates me about this whole area is how preventable the confusion is. The “unpaid internship” became a cultural institution in American professional life sometime in the 1980s, and by the time the startup era hit its stride, it had calcified into an assumption: young people trade labor for experience, companies get cheap help, everyone wins. The legal framework never actually blessed that arrangement except in very specific circumstances — primarily academic credit programs where the educational institution is genuinely supervising the experience and the work is structured around learning objectives rather than business output. When a Naples-area marketing agency takes on a college junior to run their Instagram account for a summer and calls it an internship, that is not what the law had in mind.
What a Compliant Internship Actually Looks Like
The cleanest path to a legal unpaid internship runs through the college or university directly. If you are working with a school that grants academic credit, has a faculty supervisor reviewing the intern’s work, and has signed a formal agreement with your company establishing the educational nature of the arrangement, you are in substantially better shape. The intern should be doing work that maps to their coursework, keeping a journal or producing reflective assignments, and receiving feedback that serves their development rather than your deliverables. This is more administrative overhead than most founders want, but it is also the structure that most closely matches what the primary beneficiary test rewards.
The second path is simply to pay people. Florida has a robust network of community colleges and state universities whose students are actively looking for part-time paid work. At $13 an hour for twenty hours a week over a twelve-week summer, you are looking at roughly $3,120 per intern. That is not a trivial amount for a bootstrapped company, but it is also not the budget line that prevents most startups from growing. What it does buy you is a clean employment relationship, full legal protection, and — not insignificantly — an intern who is treated like a professional and tends to behave like one. In my experience, paid interns show up on time, finish tasks with less follow-up, and are more likely to refer other strong candidates your way. The economics of paying interns are better than they first appear.
There is also a middle path that more companies in South Florida’s business community are starting to use: the stipend model paired with a genuine academic partnership. The intern receives a modest flat stipend — say, $500 to $800 for the semester — earns academic credit through their school, and works under a structured learning plan. This does not eliminate all legal exposure, but it demonstrates good faith, reduces the displacement argument, and keeps the total cost manageable. The Society for Human Resource Management has useful guidance on structuring these arrangements through its HR library, particularly around the documentation that supports the educational purpose of the role.
What founders most consistently miss is the documentation piece. Even when the underlying arrangement is probably legal, the absence of written records about learning objectives, supervisor feedback, and the academic tie-in is what turns a defensible internship into an indefensible one when a complaint lands at the Department of Labor. A two-page internship agreement that spells out the educational goals, the supervision structure, and the credit-granting institution is not a legal guarantee, but it is the difference between looking like a thoughtful employer and looking like someone who found a workaround for payroll.
The Fort Lauderdale founder I mentioned at the start eventually rebuilt his internship program. He now works with two local colleges, pays a small stipend, and keeps records. He told me the whole experience cost him something beyond the legal fees: it cost him a story he’d told himself about what kind of employer he was. He’d genuinely believed the lunches and the LinkedIn recommendations were fair exchange. The law disagreed, but more than that, once he started paying people, he realized the interns were doing real work that had real value, and they’d always deserved compensation for it.
That is, in the end, the point that gets lost in the legal mechanics. The intern laws exist because unpaid labor has historically flowed toward people who can afford to work for free — which is to say, toward people who already have advantages. Paying interns is not just a compliance obligation. It is a decision about what kind of company you are building and who gets to participate in it. For founders in Florida and everywhere else, getting this right is worth the effort well before the Department of Labor makes it mandatory.
