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The legality of unpaid internships in Ontario

First published on YouthandWork.ca, lawyer Andrew Langille’s website about “youth, workplace law, economics, labour markets and public policy,” on July 19, 2011

young people holding up letters to spell "internships"

Image: http://preservationdetroit.org

Since there’s been a lot of interest on the issue of unpaid internships I thought I’d provide an authoritative piece about where the law stands in Ontario and collect all the online resources in one place. I’ve been active on this issue for a while and recently wrote a research paper on the topic of internships in Ontario which I hope to have published in the near future. There’s also been an increasing level of awareness on the topic of unpaid internships in the media with the Canadian Press and the Globe and Mail recently publishing articles on the issue. Also, Ross Perlin has written an excellent book called Intern Nation, which I’ve read and highly recommend.

The origins of the law

There is no law in Ontario that explicitly addresses internships. Rather, the Employment Standards Act (ESA) takes a longer view and carves out exclusions for trainees and students completing an internship as part of a university or college program. The exclusion covering interns contained in subsection 1(2) of the ESA is based on the following sources: the questionable Ontario divisional court ruling in Re Seketa and Wacyk et al., the 1947 US Supreme Court decision in Walling v. Portland Terminal Co. and the interpretation of US Department of Labor’s Wage and Hour Division of the US Supreme Court’s decision found in “Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act.”

The law changed significantly in 2000 with the passage of Bill 147, brought in under the Progressive Conservative government led by Mike Harris as part of a package of legislative changes relating to employment standards, labour relations and health and safety. The government sought radical reforms based on the idea that workplace law in Ontario at the time was “cumbersome, complicated, confusing and outdated” and that the updates had to ensure a “flexible, modern, efficient and fair” system. Ten years on, it appears that these reforms have given rise to widespread exploitation of young workers who are entering the labour market for the first time. It should be noted that the exclusion contained in subsection 1(2) was criticized at the time Bill 147 was introduced, and in retrospect these criticisms appear well-founded.

What’s the law now?

In mid-June, 2011, Ontario’s Ministry of Labour posted the first-ever fact sheet addressing the current state of the law on internships. Subsection 1(2) of the ESA lays out a test with six conditions that all must be met before a person can be deemed a trainee and excluded from the ESA. The six conditions are:

  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 the training.

The criteria are very stringent, and given the ubiquity of unpaid internships in Ontario, it’s not hard to see how young people are being mischaracterized as interns when they’re really employees covered by the provisions of the ESA. There isn’t much commentary on the operation of ss. 1(2); however, Dr. David Doorey has written an excellent analysis that breaks down subsection 1(2) line by line. Nav Bhandal, a lawyer with Keyser Mason Ball LLP, has also written a short commentary on the current state of the law.

It should be noted that section 3(5) of the ESA excludes “an individual who performs work under a program approved by a college of applied arts and technology or a university” from the application of the ESA. It would appear that s. 3(5) only applies where a student is working for an organization as part of co-op program or an internship that is part of the normal course of an academic program. This means that if you’re doing an unpaid internship over the summer and aren’t enrolled in school, then the test contained in ss. 1(2) of the ESA most likely applies. If students need further clarification on this point, they should consult their institution’s academic calendar and see if a work experience or internship component is listed as a requirement to graduate from the program they’re enrolled in.

Is there any case law on internships?

The leading case on unpaid internships in Ontario is Girex Bancorp v. Hsieh, in which the Ontario Labour Relations Board (OLRB) found that an unpaid internship program breached ss. 1(2) of the ESA and that an organization cannot contract out of the minimum standards contained in employment standards legislation in Ontario (i.e., the ESA, the Human Rights Code, etc.) Beyond Girex, there are very few cases that specifically address ss. 1(2).

Six other cases from the OLRB involve reports of a breach of ss. 1(2). See Infosys Canada v. Shourjeh; Select Driver Services Ltd. v. Beyene; Hakimi v. Canada Aesthetic Academy Inc.; Reyhani v. 1391367 Ontario Inc. (Beihabadi Dentistry Professional Corporation); and Cosimo’s Garage Ltd. v. Smith.

The only reported OLRB finding that organization complied with ss. 1(2) was Swift Trade Securities Training Inc. v. Pace. (The 2011 decision in Surujnairn v. Chin relies on the Swift Trade decision, but does not refer to ss. 1(2).) Also, two reported cases from the Workplace Safety and Insurance Appeals Tribunal are informative as they utilize ss. 1(2) in addressing mischaracterization of an employee. See Decision No. 2210/10 and Decision 1461/08. This case law exposes a very high degree of mischaracterization of employees in Ontario’s labour market and without a doubt this is just the tip of the iceberg.

Tips if you’re an unpaid intern

If you’re currently an unpaid intern, you have a couple of options as to how to contest your employment status. From the outset, it should be noted that interns face an uphill battle with employers as, generally, interns are at the start of their careers and are trying to get a foot in the door of their respective industries, and there is a risk of reputational harm and long-term damage to one’s career prospects.

The two most viable options to legally contest your mischaracterization as an employee are to contact the Ministry of Labour’s Employment Standards Information Centre at 1-800-531-5551 to file a complaint under the ESA, or to launch a claim in Small Claims Court alleging a breach of the ESA due to unpaid wages. If you feel that your rights under Ontario’s Human Rights Code have been breached, you can contact the Human Rights Legal Support Centre for free legal advice. Additionally, the Lawyers Referral Service of the Law Society of Upper Canada provides free legal consultations at 1-800-268-8326.

I’ve developed a non-exhaustive list of tips that unpaid interns can utilize to put themselves on better legal footing if they choose to contest their mischaracterization as employees:

  1. Keep hard copies of all information, emails and documents relating to your internship in a file folder at your residence. This would include a copy of your initial application, all emails, job description, any feedback you receive and any information given to your by your employer.
  2. Keep a daily log of the hours that you work (i.e., start/end times, breaks, lunch, etc.) and document what duties you’re performing on an hourly basis.
  3. If you receive any form of remuneration from your employers (e.g., honorarium, travel expenses, etc.) ask for it in the form of a cheque or direct deposit. When you receive the cheque or direct deposit, photocopy the cheque or print out the transaction record and add it to your file folder. This creates a paper trail and can be used as evidence of a breach of ss. 1(2) of the ESA. If you can’t get a cheque or direct deposit, then make a note about the amount of money you received, the time and date, and who gave it to you.
  4. Keep copies of the final work product or drafts of what you’re doing (e.g., if you’re working as a graphic designer keep a copy of the files or if you’re a journalist or copy editor keep copies of the articles you work on and the research you’re doing for them).
  5. Ask in the initial interview if you have the potential to become an employee of the organization with which you’re completing the unpaid internship. If you’re offered the right to become an employee at the end of the internship, then the employer may have breached ss. 1(2) of the ESA.
  6. Get advice early in the internship about your rights from the Ministry of Labour or an employment lawyer, as it’s important to understand your rights even if you decide to do nothing about it and there are strict timelines relating to limitation periods addressing when you have to start a legal action.

Andrew Langille
YouthandWork.ca

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