Originally Published September 27, 2010
I’ve been asked by the media twice in the last week about the legality of using “unpaid interns”. Interns are usually understood to be people who receive practical experience in order to obtain some sort of training to help them get real jobs later. It’s a good question to have employment law students examine. The answer is suprisingly complicated because governments are trying to balance a variety of competing interests.
On the one hand, employers could easily exploit a law that permitted them to simply call people interns and thereby avoid employment standards laws. Also, unpaid interns could replace real jobs, which is not good for the economy. On the other hand, the state wants young people to gain work experience, and some employers who would not otherwise provide workers with experience to develop skills might allow interns to gain some experience by hanging around the workplace if they don’t have to pay them. Therefore, the state is trying to write a law that protects against the first two “bad” aspects of internships while permitting the third “good” aspect. Try writing a law that does that!
Here’s my take on this. THIS IS NOT A LEGAL OPINION. If you have questions about your own situation as an “intern” or employer, call a lawyer, read the statute and form your own opinion, or call the Ministry of Labour.
You have to start with realization that under the normal rules of contract law, an agreement by a business to provide training and work opportunities to workers, without paying them, would be an enforceable contract. There is no common law rule of contract that requires the consideration going to a worker be wages. What potentially makes an ‘unpaid internship’ illegal is government regulation (Employment Standards) that requires that ’employees’ be paid at least a minimum wage, among other entitlements.
So, we need to look at what the Employment Standards Act says about this. Note firstly that the Ontario ESA never mentions the words ‘unpaid intern’. This is an HRM term, not a law term. In the ESA, a worker is either an ’employee’ or not an ’employee’. Only “employees” are covered by the ESA. Section 3(5) of the Ontario ESA excludes from the Act, “an individual who performs work under a program approved by a college of applied arts and technology or a university.” So that’s easy: if the internship is part of a higher education co-op program, then the Act does not apply. This means it’s incumbent on the company, and the educational institution to ensure that workers are being properly trained, and not exploited. Question: Even if an internship is part of a formal training program, is there any good reason why normal ESA restrictions on maximum hours of work should not apply?
Then things get more complicated. The Ontario ESA defines an “employee” (in section 1(1)) as follows:
(a) a person…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)…
Subsection (2) says (with my comments added):
(2) For the purposes of clause (c) of the definition of “employee” in subsection (1), an individual receiving training from a person who is an employer is an employee of that person if the skill in which the individual is being trained is a skill used by the person’s employees, unless all of the following conditions are met (NOTE THAT ALL OF THESE CONDITIONS MUST BE MET):
1. The training is similar to that which is given in a vocational school.
[What do you think a “vocational” school means? Well, it almost certainly does NOT include getting coffee, answering phones, and running errands for some idiot who thinks an “intern” means “personal slave”. The law is intended to exclude from the ESA arrangements in which someone is receiving real training in a field that you could (or do) go to school to learn. Ask whether there are educational programs that teach the specific skills the intern is being taught. If the answer is no, then the ESA applies. Do you know any colleges that teach “coffee making” or “errand running”?]
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.
[So, numbers 2 and 3 together mean that the purpose of the internship/training is to provide a benefit for the intern, but not the person/entity providing the training. Thus, if the person does “real” work, that the employer would need to have hired people do, then the intern begins to look a lot like an “employee”]
4. The individual does not displace employees of the person providing the training.
[This clearly catches an employer who lays-off an employee and gives their work to an “intern”. If that is done, the intern is an “employee”. Does “displace” also cover an employer who retains an intern instead of a new”employee”? ]
5. The individual is not accorded a right to become an employee of the person providing the training.
[This creates an incentive for Employers to tell employees that they will NEVER get hired into a real job. Is that a good policy? It also means that when the possibility exists for the intern to be hired at the end of the intern period, the person is an “employee”.]
6. The individual is advised that he or she will receive no remuneration for the time that he or she spends in training.
[This seems to mean that if an intern is paid anything, then she is an “employee” under the ESA. An intern is someone who is paid “no remuneration”. ]
As you can see, whether or not an “intern” is an “employee” under the Ontario ESA depends on all of the circumstances as applied to these criteria. The rules would certainly make someone an “employee” if they are retained to do valuable work for the employer that but for the “intern” would have to be done by either an employee or some other paid independent contractor. The law is intended to exclude from ESA protection only real, legitimate training programs designed to educate the intern. The employer is supposed to be doing a social service by exposing the worker to the “real” workplace. It is not supposed to be a system in which employers can get cheap or free labour.
I suspect there are a lot of employees in Canada being improperly called “interns” by their employers. Are you one of them?
Does anyone have any thing to add about the treatment of unpaid interns under our laws? Have I missed something?