With each summer comes a wave of students on break and new
graduates all looking for a way to gain career experience. This
summer, graduation time has coincided with the media spotlight
being focused on the nature of unpaid internships in the U.S. and
Canada. It is therefore probably a good time for employers with
some sort of internship program to reassess whether what seems like
free labour is actually a liability in disguise.
Employers are familiar with minimum wage requirements. Most
equal or exceed these rates for regular employees who require
on-the-job training. However, when it comes to engaging people who
are willing to work for free just to get experience, all thoughts
of employment standards can sometimes go out the window.
Each provincial and federal government has standards for minimum
wages, hours of work, overtime and other basic employment
conditions, but only a few provide express guidance on whether
these standards apply to interns. Much of the employment standards
legislation in Canada is ambiguous in this regard. Statutes that
define employees by reference to the performance of work and an
entitlement to wages are of little assistance when the question is
who is entitled in the first place. In the case of employers
under federal jurisdiction, such as banks and broadcasters, no
definition of who counts as an 'employee' for minimum wage
purposes is provided.
In British Columbia, on the other hand, some of this ambiguity
has been alleviated by the government's publishing of an
Interpretation Guidelines Manual. Its definition of work excludes
'practicums' that are performed as part of a degree
program. Persons on a practicum can be unpaid; other interns must
In a couple of provinces, the minimum wage regulations only
apply to persons who are paid wages. This seems to exclude unpaid
workers. Elsewhere, such as in Newfoundland and
Labrador, employees are defined by the fact they
provide services or are under a contract of services. That
approach leaves little, if any, room for employers to deny an
obligation to pay interns.
In Ontario, the employment standards law provides us with
detailed guidance. It is based on the interpretation given the 1938
U.S. Fair Labour Standards Act by the U.S. Supreme Court.
Under Ontario's Employment Standards Act, 2000, a person
will not be considered an employee during a training period
whereall of the following are true:
The training is similar to that which is given in a vocational
The training is for the benefit of the individual.
The person providing the training derives little, if any,
benefit from the activity of the individual while he or she is
The individual does not displace employees of the person
providing the training.
The individual is not accorded a right to become an employee of
the person providing the training.
The individual is advised that he or she will receive no
remuneration for the time that he or she spends in training.
Despite these criteria, in Ontario, as in the United States, the
practices of interns and employers do not necessarily match up to
Businesses offering internships in Canada would do well to check
how their program measures up. If an intern should be considered an
employee, more minimum standards than just wages will apply.
Now that this topic has caught the attention of some political
parties, perhaps governments will provide some further guidance to
let businesses know when they can legitimately use unpaid interns.
The down side is that the attention being given to the subject
could lead to a rise in claims by ex-interns and investigations by
government agencies, of internship programs that were thought to be
legitimate. Employers who want to mitigate against claims for back
pay, potentially significant fines, and bad press may want to take
this opportunity to ask whether they can afford not to pay
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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