Unpaid Internships: What Employers Need to Know

May 3, 2013

The issue of unpaid internships has been in the news again
lately.  HootSuite, a Vancouver-based
social media management company, ironically attracted widespread negative media
attention after a post on social news website Reddit accused the company of
breaking B.C. law by hiring unpaid interns. 
Elsewhere, Toronto city councillor Ana Bailao found herself in the media
spotlight as a result of a recent tweet that advertised an unpaid internship in
her office.  As both HootSuite and
Councillor Bailao recently learned, the practice of not paying interns often violates
employment standards legislation. 

In recent years, there has been an increase in the number of
organizations using unpaid interns, and there seems to be widespread confusion
over an employer’s legal obligations to pay for an intern’s services.   Given recent media attention on this issue,
and the fact that many college and university students are now looking for
work, we thought it would be helpful to review the law. 

In most circumstances, if a person performs work for an
employer, the employer must pay him or her at least the minimum wage in that
jurisdiction.  Some exceptions exist for volunteering
in the non-profit sector, training programs in particular professions and for student
practicums which are part of the formal education process.  However, most interns (typically, college or
university students who want to obtain practical work experience) do not fall
within these exceptions.

Canadian employment standards laws do not explicitly
regulate internships.  Thus, the question
is whether interns qualify as “employees” performing “work” under the
legislation, such that minimum wages apply. 

According to B.C.’s Employment
Standards Act, “employee” includes a person receiving or entitled to wages
for work performed for another, a person an employer allows to perform work
normally performed by an employee, and a person being trained by an employer
for an employer’s business.  Further, the
Interpretation Guidelines Manual, which sets out definitions for “internship”
and “practicum”, makes it clear that persons receiving on-the-job training not
part of a formal education process must be paid at least the minimum wage.  Similarly, Ontario’s Employment Standards Act, 2000, which specifically addresses
training, requires employers to pay the minimum wage unless all of the
following conditions are met:

  1. The training is similar to that which is given
    at 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 he or she spends in training.

The law appears to be somewhat less clear in other
jurisdictions where there is a lack of interpretive aids and where “employee”
and “work” are defined broadly in the legislation.  Nevertheless, even in the absence of the more
specific type of guidance set out in the B.C. and Ontario laws, the general
rule is likely to be applied fairly consistently across the country.  Remember also that an employer may not
contract out of minimum employment standards, and will have a liability even if
an intern agrees to work for no pay.

What, then, can employers do to ensure they don’t run afoul
of employment standards legislation? 
Employers are well advised to take a close look at whatever internship
or practicum programs they provide and ask the following question: ‘Is this the
type of work that I would ordinarily ask one of my paid employees to do?’  If the answer is yes, and the work is not
part of a practicum or other formal educational process, then it is likely that
the person performing the work is owed at least the provincial minimum wage.

Disclaimer

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