The Unpaid Internship: Exploitation or Opportunity?

The use of unpaid internships by some employers has become increasingly common over the past decade. Unlike employees, interns do not receive the same legal protections, nor do they receive a salary, vacation pay or overtime pay. An intern's only compensation is opportunity and experience. 

The use of unpaid interns has come under increased media and political scrutiny. Fuelled by horror stories of young interns collapsing under extreme workplace pressures, the issue reached the political agenda. In the summer of 2014, the Ontario Ministry of Labour carried out a highly publicized workplace inspection blitz to determine if intern rights were being respected.

Rules governing the appropriate use of interns in Ontario are not new. They had been in place long before the summer 2014 blitz. The rules are set out in section 1(2) of the Employment Standards Act ("ESA"), and provide that a person is to be considered an employee unless six prerequisites are first met:

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

The results of the 2014 workplace inspection blitz are enlightening. In total, the Ministry investigated 56 workplaces to determine their compliance with the rules surrounding interns and internship placement. Of those employers, 31 workplaces were currently engaging unpaid interns. Of those 31 workplaces, 13 (or 41%) were found to be in violation of the ESA. The most common violations encountered were failure to pay minimum wage, vacation pay or public holiday pay. In total, the Ministry found over $48,000 in payments owing to individuals determined to in fact be employees.

Interns working in federally-regulated industries (which includes Banks, Airlines, and Broadcasters) are not subject to the protections provided by the ESA. Instead, the Canada Labour Code ("CLC") governs. Unlike the ESA, the CLC does not contain a provision addressing the use of unpaid interns. That said, the issue has received recent attention.

In early 2016 proposed changes to the CLC were tabled. These include permitting federally-regulated employers to engage interns on an unpaid basis for up to four months, provided that the position is primarily for the benefit of the intern and does not replace a paid position. In a recent Toronto Sun news article, Andrew Langille, General Counsel for the Canadian Intern Association, criticized the proposed changes. He stated "essentially what the federal government is going to be allowing is for four-months unpaid probationary periods for all new hires."

In light of the scrutiny that unpaid internships are continuing to receive, employers are best advised to take a hard look at how they currently offer these roles. Proactive steps in this regard are the best way to avoid unwanted liability. Likewise, individuals accepting internship opportunities should be sure that the terms of the internship are understood by both parties.

This article was first published on April 18, 2016 on First Reference Talks.