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Unpaid interns: The pros and cons of working for free

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Earlier this week, the president of the Canadian Internship Association, Claire Seaborn, spoke on CBC Radio about various controversies concerning unpaid internships by youth and new Canadians. In the last few months, unpaid internships have attracted attention from the media and the Ministry of Labour. Indeed this spring, the Ministry of Labour conducted workplace inspections focussing on unpaid internships. Two leading Canadian magazines, The Walrus and Toronto Life, decided to end their unpaid internship programs following these inspections.

NDP MPP Peggy Sattler has introduced a private member’s bill, the proposed Greater Protection for Interns and Vulnerable Workers Act,which targets what she says are the growing number of students and new immigrants who appear to be working for free under the guise of training. “We are creating a new generation of workers who are going to start out their careers having . . . to go from unpaid internship to unpaid internship.” Toronto Star (July 23, 2014)

Historically, unpaid internships have afforded newly minted graduates and immigrants the opportunity to gain experience, network and polish their skills. As I listened to Ms. Seaborn speak about the possible abuse of unpaid interns, I thought it would be useful to review the legal framework which governs this area. It is no coincidence that this issue has arisen during the summer months when many students and new graduates are seeking experience.

The Ontario Employment Standards Act, 2000 (“ESA”) sets out the rights and responsibilities of employees and employers in Ontario. The ESA does not define “intern”. Instead, it defines an “employee” as:

(a) a person, including an officer of a corporation, who performs work for an employer for wages,

(b) a person who supplies services to an employer for wages,

(c) a person who receives training from a person who is an employer, as set out in subsection, (2), or

(d) a person who is a homeworker, and includes a person who was an employee.

Under the ESA an “employee” must be paid at least the prescribed minimum wage.

There are three exceptions to this minimum wage requirement which allow employers to not pay the individual. Those exceptions are:

  1. Internships that are part of a program approved by a secondary school board, college, or university;
  2. Internships that provide training for certain professions (e.g. architecture, law, accounting, dentistry);
  3. Interns who work as “trainees” which meet all of the following six conditions:
        • The training is similar to that which is given in a vocational school.
        • The training is for the benefit of the intern. The intern receives some benefit from the training, such as new knowledge or skills.
        • The employer derives little, if any, benefit from the activity of the intern while he or she is being trained.
        • The training doesn’t take someone else’s job.
        • The employer isn’t promising the intern a positon at the end of the training.
        • The intern has been told that he/she will not be paid for their time.

It is this “trainee” exception which gives rise to confusion (and controversy) among employers and where the lines are blurred between “employee” and “intern”. What activities are considered internships and which are not?  In my view, the language of the ESA makes it difficult to draw the line between “employee” and “intern”. The socio-economic reality is that there are many young graduates and new Canadians willing to work for free to obtain experience. Interning is probably one of the best ways to gain that experience. While abuse and exploitation are abhorrent, acquiring experience is not.

I read the “trainee” exception to mean that the more an employer benefits the less likely the person will be classified as an intern. Having said that, here are a few tips to consider if you are an organization that engages unpaid interns.

  • If a person is carrying out a function which is normally carried out by a paid employee and is paid even a small amount (i.e. less than minimum wage), there is a risk that the person would be viewed by the Ministry of Labour as an employee, not an intern. There are times when it will be tempting to pay interns, but this only invites scrutiny by the Ministry.
  • Make sure that all documents relating to interns are clear and well drafted to properly set out the nature of the relationship.  An oral agreement will be tougher to explain (and justify) to the Ministry of Labour inspector.
  • Have a written training program in place which sets out the various stages of the internship.
  • Make sure the intern is advised (preferably in writing) that that there are no guarantees of future employment once the internship comes to an end.

Marie-Helene Mayer