Large companies often have more rigourous intern programs developed by affiliates in larger markets. But small and growing organizations often have to start such programs from scratch. And, unfortunately, many programs are born out of an idea that free labour is just a phone call away. This column from Profit explains the pitfalls of such thinking to small- and medium-sized enterprises.
Most businesses don’t hesitate to bring on an unpaid intern, especially in the summer months, to pick up the slack left by full-time staff on vacation or pitch in during a particularly busy time. But, earlier this year, Vancouver-based digital media start-up HootSuite endured a social media battering because of its use of unpaid interns. Critics pointed out that with few exceptions, the use of unpaid interns is illegal under B.C.’s Employment Standards Act (ESA). Other provinces, such as Ontario, have similar laws.
In response to the backlash, HootSuite CEO Ryan Holmes acknowledged the fact after an internal review and changed company policy. HootSuite gave back pay to interns who had worked at the company over the previous six months, while ensuring that all current and future interns would be paid for their work.
It seems that taking unpaid internships has become a veritable rite of passage in some sectors, including the creative field—think advertising and PR agencies—journalism, fashion design, technology, non-profits and even government. In some cases, highly-skilled recent graduates unable to find full-time work have resorted to taking unpaid internships simply to have the opportunity to work in their field.
It’s this prevalence that has led to the backlash. As more and more businesses use unpaid interns, jurisdictions across the country are taking notice.
In most provinces, the definition of an intern is vague or altogether absent from labour legislation, which is why it’s not always clear what’s legal. A common misunderstanding is that calling someone an intern relieves you of your requirement to pay for their services. While there are some very limited exceptions, in most cases individuals who work are legally guaranteed at least the provincial minimum wage.
In a recent statement intended to clarify the issue, the Ontario Ministry of Labour noted that if “you perform work for another person or a company or other organization and you are not in business for yourself, you would be considered to be an employee, and therefore entitled to ESA rights such as the minimum wage.”
That could be problematic for SMEs, which often leverage the expertise of these (typically) young workers to fill key roles.
So, what are the options if your business has traditionally relied on unpaid interns?
The most obvious is to simply pay them the provincial minimum wage for their work, possibly employing them on a part-time basis to minimize costs.
The other is to affiliate your firm with a high school, college or university program. Students performing work under a program approved by a college of applied arts and technology or university—or a program authorized by a secondary school board that operates the school in which the student is enrolled—may be exempt from employment standards provisions, including the requirement to pay minimum wage.
It’s also worth consulting the Ontario Ministry of Labour’s criteria for exempting an employee from minimum wage requirements. Although these rules are Ontario-specific, they offer a useful rule of thumb that can be applied fairly evenly across the country: only in relatively rare circumstances is it permissible to employ an intern in Canada without paid compensation.
The intern’s training must:
• Be similar to what they would receive at a vocational school
• Be to their benefit and include the acquisition of new knowledge or skills
• Not take another person’s job
• Not include the promise of a job at the end of the internship
• Include clear terms stating that they will not receive paid compensation for their internship
• Not produce a financial benefit for the employer
Greater government scrutiny aside, interns will continue to be a fixture across Canadian workplaces this summer and for many to come. But employers will need to be far more diligent if they hope to avoid running afoul of provincial labour legislation.
Laura Williams is an employment lawyer and founder of Williams HR Law
This story originally appeared at ProfitGuide.com
