The Walrus and Toronto Life, two high profile Canadian magazines, recently shut down their internship programs after a Ministry of Labour investigation concluded that the programs contravened the Ontario Employment Standards Act (the “ESA”). The Ministry issued compliance orders for violations of several standards, including a failure to pay the interns minimum wage.Canadian Geographic and Rogers Publishing have since followed suit, also ending their unpaid internship programs.
The news will likely be filled with similar stories over the next few months as the Ontario Ministry of Labour has announced that it is conducting an employment standards enforcement blitz. from April to June 2014 focusing on unpaid internships across a variety of sectors. Sectors known for their use of unpaid internship programs such as marketing/public relations, software development, retail, media, film, and entertainment will be inspected through a proactive enforcement blitz to ensure compliance with the ESA.
As we noted in a previous blog post, unpaid internships often run afoul of employment standards legislation. In Ontario, the general rule is that all interns must be paid and receive entitlements pursuant to the ESA. This general rule is subject to two strict exemptions:
First, the ESA does not apply to work performed under an internship or co-op placement approved by a college of applied arts and technology or a university. The second exception applies where the intern is a “person receiving training” and all of the following conditions are met:
- The training is similar to that which is given in a vocational school;
- The training is for the benefit of the intern. The trainee must receive some benefit from the training, such as new knowledge or skills;
- The person providing the training derives little, if any, benefit from the activity of the intern;
- The intern’s training does not displace the employees of the person providing the training;
- The person providing the training must not promise the intern a job at the end of his or her training; and
- The intern has been advised that he or she will not be paid for the time that he or she spends in training.
Employers must be aware that simply calling a worker an “intern” or “unpaid intern” does not shield it from its obligations under the ESA.
In light of the blitz and the potential consequences of non-compliance, employers may wish to conduct a review of their internship programs to ensure compliance with the ESA. Specifically, employers should verify that their internship program either (a) meets one of the two narrow exemptions allowing unpaid internships discussed above; or (b) provides interns with the same minimum rights and benefits as employees in accordance with the ESA. If the Ministry concludes that an unpaid internship is illegal, it could result in an order to pay amounts such as minimum wage, vacation pay or holiday pay that the individual should have received had he or she been properly classified as an employee under the ESA.
Possible Legislative Changes
Internship programs may soon face further restrictions. On March 4, 2014, a private member’s bill known as the Greater Protection for Interns and Vulnerable Workers Act was introduced. If passed, the Bill would deem an intern to be an “employee” for the purposes of certain sections of the ESA, such as records, hours of work and eating periods, and leaves of absence. The Bill would also:
- Require employers to provide interns with at least 2 weeks’ unpaid vacation after each completed entitlement year and to give interns public holidays off;
- Permit interns to takes leaves of absence;
- Permit interns to file reprisal and other complaints to the Ministry of Labour alleging violations of the ESA; and
- Require the employer to provide interns, in writing, with information about their employment status and their rights under the ESA, the terms of the their employment, and their hours of work.
The Bill would unquestionably increase administration costs to employers who engage unpaid interns. We will continue to monitor the progression of this legislation going forward.