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Ministry of Labour proactively investigating employer compliance with ESA

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Although the Employment Standards Act, 2000 (“ESA”) is intended to be remedial legislation designed to protect vulnerable employees, it is only as effective as its enforcement mechanism.  In an effort to ramp up such enforcement, the Ontario Ministry of Labour periodically performs a series of “enforcement blitzes” to proactively investigate employer compliance with the ESA and the Occupational Health and Safety Act (“OHSA”).  A schedule of upcoming blitzes can be found on the Ministry of Labour’s website.

During these blitzes, the Ministry hones in on sectors with a history of non-compliance in whatever area that particular blitz is covering. For example and as discussed in greater detail below, the Ministry recently completed a blitz on compliance with the ESA in respect of internships. In performing this blitz, the Ministry focused on areas such as the technology sector that are known to have internship programs.

Interns Must Be Paid

Contrary to popular belief, and in almost all cases, an unpaid “internship” would be in violation of the ESA. Generally, if a person performs work for a company or another person, he or she will be considered an employee and, as an employee, they will be afforded the protections (e.g. entitlement to pay for work performed) under the ESA.

Pursuant to the ESA, an individual receiving training from an employer is an employee for the purposes of the ESA if the skill in which the individual is being trained is a skill used by the employer’s employees.  However, there is an exception to this general proposition where all of the following conditions are met:

  • The training is similar to that which is given in a vocational school.
  • The training is for the benefit of the individual.
  • The person providing the training derives little, if any, benefit from the activity of the individual while he or she is being trained.
  • The individual does not displace employees of the person providing the training.
  • The individual is not accorded a right to become an employee of the person providing the training.
  • The individual is advised that he or she will receive no remuneration for the time that he or she spends in training.

Essentially, unless all of the above-noted conditions are met, the person will be entitled to pay, subject to any other exemptions in the ESA. One such circumstance where the ESA does not apply is to an individual who performs work under a program approved by a college of applied arts and technology or a university. Although not reviewed in this blog, Section 3(5) of the ESA sets out other limited situations where a person may not be statutorily entitled to pay.

In connection with the perception that many employers are not adhering to the above-noted statutory scheme, the Ministry recently decided to investigate employers in industries with a high proportion of younger workers to ensure compliance with the requirement to pay “interns”.

Internship Blitz

From September 1, 2015 until December 31, 2015, the Ministry conducted a blitz that focused on internship programs.  The assessment comprised of workplaces across Ontario, with a greater focus on the Greater Toronto Area.  The Ministry said that the goal of this blitz was to:

educate employers and promote compliance with the ESA in sectors that often employ young workers, who have an increased exposure to precarious working conditions that fall outside the traditional employment relationship.”[1]

Of the 123 inspections done in this blitz, the Ministry found that 77 of the employers had interns and of those 77:

  • 41 were found to have programs that exempted the interns from the ESA (e.g. specified co-op students, certain trainees)
  • 18 had paid interns and were found to be in compliance with the ESA.
  • 18 had interns and were found to be in contravention of the ESA.

Of the 18 contraventions (from which the Ministry assessed $140,630 in unpaid amounts owing to employees), the most common monetary violations were in respect of:

  • Vacation Pay / Vacation Time
  • Public Holidays / Public Holiday Pay
  • Minimum Wage

The most common non-monetary violations were in respect of:

  • Wage Statements
  • Record Keeping

Lessons to be Learned

Employers should review their internship program or policy to ensure it complies with the minimum standards under the ESA.  Specifically, an employer should treat an “intern” as though he or she is an employee (i.e., keep proper records, provide at least minimum wage, account for vacation / holiday pay, etc.), unless the exemptions mentioned above apply.

On a more general note, these blitzes serve as a reminder to all employers to get ahead of the Ministry’s inspection and proactively review and update policies and practices.  Not only will this minimize the risk of penalties and fines from the Ministry, but it will also help create a positive and safe working environment by assuring employees that their rights are being respected.

David Witkowski

[1] Blitz Results: Internships (April 29, 2016), Ontario Ministry of Labour, available online at http://www.labour.gov.on.ca/english/es/inspections/blitzresults_intern2016.php

About the Author: Toronto employment lawyer David Witkowski supports both employee and employer clients with legal counsel in all areas of employment law, including employment contracts, wrongful dismissals, workplace policies, employment standards, workplace investigations and human rights in the workplace.