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Unpaid Internships: Are They Legal?

By: George Waggott, founder, and Roberto Fonseca-Velazquez, summer law student,

George Waggott Law


Internships have become a common step in the career trajectory of young people in workplaces across Canada. Internships are often portrayed as positions which allow young people to gain valuable experience building skills and relationships in an industry they are interested in. Although most interns are students or recent graduates, other young people

also seek internships. While many of these positions are paid, unpaid internships are also popular. The concept of a young person working for free is quite controversial and some even argue it is, or ought to be, illegal. Employers should be aware of how utilizing unpaid interns can affect their company, through both legal repercussions and negative publicity.

 

The controversy around the legality of unpaid internships revolves around the contention that many unpaid interns are an “employee” of their boss as defined by the Employment Standards Act (ESA), 2000. The ESA guarantees a wage and certain benefits to all employees, so if unpaid interns are in fact employees, the law says they must receive a salary. Interns are similar to employees in that they are usually required to work pre-determined hours, are not free to come and go as they please, and the employer derives an economic benefit from their work. In Rizzo & Rizzo Shoes, the Supreme Court of Canada ruled that provincial employment laws should be construed and interpreted in a “broad and generous manner” because their purpose is to establish the minimum standard of entitlements employers owe to workers. The broad interpretation of the ESA definition of “employee” would mean that where the nature of the relationship between an intern and his boss is unclear, we should err on the side of classifying it as an employment relationship.

 

To establish that an unpaid internship complies with Ontario law, an employer must prove that the worker falls into one of three main exceptions to the definition of “employee” found in the ESA. While all interns working in federally regulated industries, such as telecommunications, banks, and air transport must be paid for their work, all other employers should consider these exceptions when evaluating whether their intern is legally an employee. 


The following exceptions are not “employees” under the ESA:

 

1.     A secondary school student who performs work under a work experience program authorized by the school board that operates the school in which the student is enrolled.

 

2.     An individual who performs work under a program approved by a college of applied arts and technology or a university.

 

3.     They are a trainee who meets the following six conditions:

 

a.     The training is similar to that which is given in a vocational school.

 

b.     The training is for the benefit of the individual.

 

c.      The person providing the training derives little, if any, benefit from the activity of the individual while he or she is being trained.

 

d.     The individual does not displace employees of the person providing the training.

 

e.     The individual is not accorded a right to become an employee of the person providing the training.

 

f.     The individual is advised that he or she will receive no remuneration for the time that he or she spends in training. If the internship does not fall into one of the above three exceptions, the intern is an employee who must be paid and awarded all the protections of the ESA.

 

By offering to pay in experience and connections, interns may feel obligated to take an unpaid job, despite it not being feasible in their circumstances. Secondly, by falling into an exception in the ESA, interns are missing essential protection under the law related to their work. Essentially, interns are not statutorily protected.

 

It is important for employers to do their due diligence when defining a position as an “internship.” In 2014 the Ministry of Labour conducted many investigations into industries with large numbers of unpaid internships. After 56 inspections, 13 employers had internships with contraventions of the law, and the Ministry issued 36 compliance tools. Simply calling a position an “internship” does not make it one, and could lead to illegal misclassification of employees. Risks of misclassification include fines, obligation to pay back wages, vacation pay, holiday pay, and potentially negative publicity.


Ultimately, internships are an excellent opportunity for a young person to develop skills and connections in an industry. The employers who opt to pay interns, regardless of their status within the exemptions, are more likely to be protected against negative publicity or misclassification issues. Employers that utilize unpaid internships remain aware of the legal issues surrounding unpaid internships and ensure that the position is classified properly.

For more information about George Waggott Law, please see: www.georgewaggott.com, or contact: george@georgewaggott.com





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