Unpaid Interns

April showers have turned into May flowers, and the college and university students are once again filling out the corporate ranks as “interns”.  Many companies exchange valuable experience on a student’s CV for unpaid help, and assume that if the company calls this an “intern” relationship, then they are entitled to do so. 

Before you dive into engaging unpaid interns, make sure that your company intern program complies with the exemption from the definition of “employee” in the Ontario Employment Standards Act (the ESA).  If your program does not comply with the very strict exemptions, then your intern is an employee and is entitled to the minimum employee rights set out in the ESA. These standards include minimum wage, overtime pay, vacation pay, hours of work restrictions and obligations upon termination.

The exemption for “interns” in the ESA is intended to allow companies to participate in the training of students in a field of work. If the intern is being trained in a skill that the company’s employees use, then that intern is considered an employee, unless all of the following criteria 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; and
  6. The individual is advised that he or she will receive no remuneration for the time that he or she spends in training.

These requirements call into question the basis of many corporate intern programs. First, most companies expect to derive value from an intern program.  Second, the intern is often used in place of an employee (i.e., if the intern was not doing the job then the company would need to hire someone else to do it).  Third, company intern programs often lead to employment with the company after the period of “internship” expires, and this expectation may be set by the company.

If your company intern program fails on even one of these six points, then the program faces two choices: it can convert to a paid internship program, which complies with the minimum expectations set out in the ESA, or it can be revised to comply with the exemptions. A failure to address an unpaid intern program, which does not fall under one of the exemptions, can lead to a Ministry of Labour investigation and ruling.

Intern programs are best set out in writing and include an agreement with the intern on certain key terms of the engagement, including a clear statement that the intern will receive no remuneration during the internship.

How Can We Help?

Please contact us if you would like to have your internship program reviewed for compliance or you would like a written internship program drafted.