Are unpaid internships illegal?
Unpaid internships are seen as the means to get job experience or a 'foot in the door.' But more often than not, these positions are illegal.
Unpaid internships are often seen as the means to get that ever elusive job experience or a "foot in the door," especially in a tough job market. But more often than not, these positions are illegal ones.
"I would say upwards of 95 per cent of unpaid internships [in Ontario] are probably illegal," says Andrew Langille, a Toronto lawyer who has been researching Ontario labour standards and case law related to internships.
Langille says the illegality results because most unpaid internships, outside of academic internships governed by a high school, college or university, violate at least one of the six criteria outlined under Section 1 of the Employment Standards Act.
The act says a person is only an unpaid intern under the following conditions:
- The internship is similar to training which would be given in an educational environment.
- The internship experience is for the benefit of the intern.
- The intern does not displace regular employees, but works under close supervision of existing staff.
- The employer that provides the training derives no immediate advantage from the activities of the intern and on occasion its operations may actually be impeded.
- The intern is not necessarily entitled to a job at the conclusion of the internship.
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
This same six-prong test is used by the U.S. Department of Labor and unless all the above criteria are met, the law says an intern is considered an employee, so they must receive at least minimum wage.
Internships with honorariums also illegal
Langille also contends that the same standard applies to internships that award honorariums. If the honorarium didn't meet the minimum wage requirements, then it would be illegal for two reasons, says Langille:
"One, the employer would've breached the sixth prong of the test; and two, if someone's an employee and they're receiving an honorarium that's not meeting minimum wage, you would owe the difference between the honorarium and what should've been paid with the minimum wage. They would also have to pay other applicable expenses like worker's compensation, employment insurance and income tax."
Internships more like entry-level positions
"Unpaid internships today are what entry-level positions were 30 to 40 years ago," says American author Ross Perlin, who charges that tens of thousands of internships violate U.S. law and whose new book Intern Nation is perhaps the first comprehensive look at the issue.
Even though preference for unpaid internships may be given to students pursuing course credit, such an arrangement is not a requirement and the responsibilities of the position are almost always the same as those of paid employees. Also, employers generally don't assume a one-on-one teaching role as part of the ongoing supervision of the intern.
So why are these internships allowed to continue?
Employers don't know they're breaking laws
"A lot of employers don't know that what they're doing is illegal," says Perlin. "They may not consider it unethical either because some of them think they're doing kids a favour by giving them these opportunities. It's become natural for people to work unpaid for months on end and for employers to run their businesses on this unpaid labour."
In fact, he says the practice is so regarded as the prestigious gateway into the white collar workforce that people often beg to work for free just to get their foot in the door. Employers know they can dictate the terms of entry; Perlin has seen many cases where internships result from young people volunteering themselves for a position that doesn't even exist and offering to work for nothing in hopes of landing a job.
Afraid to buck the status quo
"It has become more and more this kind of flexible, cost-saving labour force that employers can conveniently use to plug holes and fill gaps," Perlin continues. Besides, many interns are getting real benefits from the position and feel they will be seen as a troublemaker or lose the opportunity entirely if they challenge an internship's legal status.
"Some people know that they're getting screwed by this," says Perlin. "But the attitude is, 'Well, it's a temporary thing, I'll suck it up for now and as long as in a year from now I do get a job and I'm able to move on in life, I'll be able to forget about it.' "
As a result, Langille counts only 11 court decisions regarding internships in Ontario and though he does not have the legal knowledge to make generalizations about unpaid internships in the rest of Canada, it does not look good. "To the extent that there are a lot of unpaid internships in Canada, I think there are questions to be raised," he says.
Aaron Broverman is a writer in Toronto.
MSN.ca Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.