WATCH: Students against internship scams
It’s a common workplace scam that targets young adults: Recent graduates, desperate for experience, do unpaid internships with promises or suggestions of eventual paid employment. The business owner or company then works the grad for no pay for six months or so, reaps the value created and, ultimately, the intern does not get full-time paid employment. In some cases, companies will even layoff paid staff to replace them with unpaid interns.
These practices are clearly unethical. What is less known is that they are also illegal under Ontario’s Employment Standards Act, 2000.
I think young people just out of school and who are considering internships as a way to get work experience need to protect themselves by being aware of their legal rights.
How the law defines unpaid internships
The Employment Standards Act only allows unpaid internships for the training of skilled trades.
- Companies must provide unpaid interns with skilled trades training similar to a vocational school. In fact, unpaid interns cannot be legally trained for white-collar jobs, such as administration, office services, IT functions or sales and marketing.
- Unpaid Interns also cannot legally generate any commercial value or benefit for a company or individual. In other words, it is against the law for a business to derive any commercial value from the intern’s unpaid labour.
- By law, unpaid internships cannot be guaranteed a full or part-time paid employment after the internship ends. Also, promising or suggesting a paid job at the end of the internment is not allowed under the Act.
- An unpaid intern also must not displace a paid employee.
A business that violates any one of these narrow construed provisions is in contravention of the Employment Standards Act and is liable for providing back pay to the intern and employment standards officers can, in some cases, require employers to reinstate the intern as a paid employee. As further deterrence, failure to comply with the Employment Standards Act is an offence that can result in fines of up to $50,000 for individuals and up to $500,000 for corporations that are repeat offenders.