The Ins and Outs of Unpaid Intern Positions

Published April 1, 2014

With the summer intern recruitment push now upon us, this might be a good time to get some clarification on the status of unpaid internships.

An internship position is meant to provide practical on-the-job training by the employer for the benefit of the intern, not for the benefit of the employer. These positions can provide a wealth of experience and connections for students, recent graduates and new arrivals to Canada. Over the past few years, more and more organizations are using these positions as regular components of their human resource strategies. And, in this time of fiscal downsizing, many employers may find the lure of unpaid intern positions to be attractive. A quick glance at the daily careers listings of SIRC reveals that a great many sport organizations are looking for interns right now.

But beware! Much has been written in the media over the past few months about the legality of unpaid intern positions. In a nutshell, except in very specific instances, unpaid intern positions are probably contrary to most employment laws in Canada. While each province and territory has somewhat different degrees of specificity in their statutes, the underlying message is that these positions are questionable as to their legality. While the law in Canada is quite clear about "employees", "contractors" and even "volunteers", it is silent about "interns", and this is the problem.

The crux of the issue is our legal system"s definition of “employee”. The term “intern” does not appear in employment legislation, and there is very little common law jurisprudence on the topic. As well, an employer"s use of the term "intern" versus "employee" is meaningless in terms of what the actual status of the position might be. This is similar to the issue of employee versus contractor, which we have a written about before: the legal test of whether a person is one or the other has little to do with the terminology and everything to do with the true nature of the working relationship.

This is the same for an intern. Many interns that we have observed in the sport setting are most likely meeting the definition of “employee” based on the training they receive and work they are doing.

Ontario, for example, has very specific criteria for unpaid positions, all of which must be met in order for the person to not be considered an employee:

• The training must be similar to that offered in a vocational school
• The training is for the benefit of the intern to develop their skills and knowledge
• The employer receives little benefit from the activities of the intern while they are being trained
• The intern does not take another employee’s position
• There is no promise of employment at the end of the training period
• The intern is advised that they will not be paid for their time spent in training

If any one of these criteria is not met, the intern will be deemed to be an employee and thus will subject to the Ontario Employment Standards Act. This can result in many unintended and costly consequences for the employer, including employer liability for wages, statutory deductions, tax withholdings, and payments for workers compensation premiums and employer health tax.

The only exception to these criteria is a position which is created in collaboration with an approved academic or technical program offered by a college or university, such as a co-op placement. These types of positions would not fall into the “employee” category as this type of intern is deriving a different benefit from the position, namely the accumulation of academic credits that go towards fulfilling the requirements of a diploma or degree.

A recent article in the Globe and Mail speaks to the current crack down underway in the magazine industry by the Ontario Ministry of Labour regarding the use of unpaid interns after complaints were filed. While no specific additional industries are mentioned in the article, there is reference to an expansion of the Ministry crack down to other sectors in the province as well.

Sport organizations should give careful consideration to the advertising of internship positions. The work of the position should be structured carefully to ensure it is focused on training that benefits the intern, and communications to the intern should be very clear as to the possible end game of the internship - in other words, no expectation of the position continuing or an employment position being created.

Most of the time interns are happy to have their positions and are not likely to expect their host organization to strictly comply with provincial employment legislation. However, it takes just one relationship to turn sour and a sport employer could be on the hook for many unanticipated headaches and expenses. Better to get it right at the outset, and don"t call a position an internship when it is really a position of employment.
-----------

* The Sport Law & Strategy Group welcomes Kathy as an Associate effective April 2, 2014. In a previous position with Commonwealth Games Association of Canada, Kathy managed multiple internships that placed young Canadians into sport leadership positions throughout Africa and the Caribbean. We look forward to Kathy continuing to contribute to our writings on this website.