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Can You Cover Unpaid Interns Under a Workers Comp Policy?

An agent’s commercial client plans to hire an intern who is not affiliated with a university. The intern will not be paid and will be at the office shadowing an employee for a few hours a week.
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An agent’s commercial client plans to hire an intern who is not affiliated with a university. The intern will not be paid and will be at the office shadowing an employee for a few hours a week.

Q: Can this intern be covered under my client’s existing workers comp policy, or is a volunteer endorsement necessary to secure coverage?

Response 1: Unless your state law’s definition of “employee” includes interns, the employer is not required to provide coverage. But your client may still want to consider getting an accident and health policy.

Response 2: In the absence of any affiliation with an educational institution, I question whether the individual can be classified as an intern. This sounds more like a volunteer or an unpaid employee.

Response 3: The answer depends on your state’s workers comp laws. Some states do not allow volunteers to be covered under the workers comp policy; others do. If your state is in the latter camp, contact your underwriter to see how they prefer to handle the situation. Usually, a separate policy is not necessary.

In some states, you would classify the volunteer based on what type of work they are performing. Then, you would estimate what the payroll would be if the intern was being paid, which would determine the premium.

Response 4: Add the Voluntary Compensation & Employers Liability Coverage endorsement (form WC 00 03 11 A).

Response 5: In my state, volunteers are covered under the workers comp policy of a for-profit business. Nonprofits must add an endorsement to the workers comp to cover volunteers. Ask your carrier how to handle this.

Remember, if you are covering a volunteer under a workers comp policy, keep track of their hours for auditing purposes.

Response 6: This question is best addressed to your underwriter. However, I wouldn’t consider the intern a volunteer, since it sounds like they are only shadowing an employee, not working for the insured's operation.

The commercial general liability policy seems the most likely place to find coverage, but discuss it with your underwriter. Of course, there’s no harm in adding the volunteer endorsement to the workers comp policy to cover all your bases.

Response 7: Typically, interns are covered under the workers comp policy, but this varies from state to state and based on type of business. Read your state’s labor code and workers comp laws for clarification.

Often, there is a difference between the definition of a “volunteer,” such as at a hospital or a Meals on Wheels-type service, and an “unpaid employee,” such as an intern at a movie studio or an insurance agency.

Many lawsuits have tackled this topic in numerous states. Besides checking the labor laws for workers comp regulations, check whether the unpaid intern is subject to minimum wage laws. Ultimately, the client's labor lawyer should determine the proper status of this individual.

I experienced a similar situation with a real estate manager who hired unpaid interns to work in his office under the assumption that they were "volunteers.” But under state law, they weren’t, which meant he was in violation of labor laws for failure to pay minimum wage and provide benefits similar to the other employees.

Response 8: It depends on whether the state's workers comp law covers volunteers. If not, some insurers will use the voluntary compensation endorsement to cover them.

Response 9: The answer requires interpretation of your state's work comp law, and that's a job for a lawyer.

There are several insurance-related issues for the attorney to address. First, what is the exact legal status of this person? Are they an employee or volunteer? Second, given the status of the intern, is it even possible under state law to cover them for workers comp? Third, if you can cover the intern for workers comp, does that impose an exclusive remedy? Or is the intern free to choose between workers comp benefits or a lawsuit?  

In my home state, the definitions are so vague that we always recommend making interns into employees by paying them minimum wage. That imposes the exclusive remedy, blocks them from suing, and provides medical expense and wage loss coverage without regard to fault.

This question was originally submitted by an agent through the VU’s Ask an Expert Service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

Tuesday, June 2, 2020
Commercial Lines