Employment & Labour

Unpaid internships create legal and PR risks for employers

By AdvocateDaily.com Staff

Employers may be liable for Employment Standards Act (ESA) violations even if their summer interns agree to work for free, Toronto labour, employment and human rights lawyer Christopher Achkar tells AdvocateDaily.com

Achkar, the founder of Achkar Law, says many employers operate under the mistaken belief that if a person offers to volunteer their time for no remuneration, the arrangement must be legal.

“Just because your intern agrees not to be paid, and you put it in the contract saying that both parties understand there will be no payment, doesn’t mean you’re safe,” he explains. “You can’t contract out the ESA.”

Regardless of any agreement, Achkar says the Ministry of Labour or a court could rule an intern is entitled to minimum wage — as well as other ESA protections, including vacation pay, overtime and termination payments — if they're replacing an employee the employer would otherwise pay, or if the employer derives a benefit from the work done by the intern.

In general, Achkar says the only time interns can go unpaid is when they are employed in a vocational position that provides training under an approved college or other post-secondary educational program.

“The training has to provide a tangible benefit to the intern,” he says.

In some cases, Achkar says employers may entice interns to work for free with the possibility of future paid work, but he says that approach is risky.

“The ministry may rule that you were misleading in making empty promises,” he says. “It must be clear in advance that there will be no remuneration for the work.”

In one crackdown, Ontario’s Ministry of Labour, detected 77 workplaces using interns, of which almost a quarter were in violation of the rules. The enforcement blitz resulted in the recovery of approximately $140,000 in unpaid wages, according to a Canadian Press report.

Even if companies are able to legally employ an unpaid intern, Achkar says it may not be worth the trouble from a public relations perspective, especially if the organization is high-profile or operates in a profitable sector.

“Apart from the legal risk, there is the chance that you will not look good,” he says. “You don’t want interns going to family and friends and complaining that this company couldn’t, or wouldn’t, pay minimum wage.

“That’s a more practical consideration that you may want to keep in mind,” Achkar adds.

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