Unpaid interns are temporary “workers” who are not protected by ESA provisions such as the minimum wage. As such, they are not required to be paid. However, there are very strict rules for hiring unpaid interns that make it impractical (or impossible) for the vast majority of employers to hire unpaid interns.
It is legal to hire unpaid interns only if the following requirements are met: (1) the individual must be receiving training from the organization; (2) the training is similar to that given in a vocational school; (3) the training is for the benefit of the individual; (4) the organization derives little, if any, benefit from the activity of the individual while he or she is being trained; (5) the individual does not displace employees of the organization; (6) the individual is not accorded a right to become an employee of the organization after completing the training; and (7) the individual is advised that he or she will receive no remuneration for the time that he or she spends in training.
It is therefore clear that organizations may not legally hire unpaid interns to perform work that would otherwise be completed by an employee. As such, any employment position cannot legally be filled with an unpaid intern, and merely calling the relationship an unpaid internship will not protect an employer from liability. If an employer purports to hire an unpaid intern who is, in reality, an employee, they will be violating many sections of the ESA, such as the minimum wage, vacation and holiday pay sections, and may be held liable for those violations.
In the past, the Ministry of Labour often did not enforce the law around unpaid interns, and many organizations were able to get away with hiring “unpaid interns” who were, in reality, employees entitled to pay under the ESA. However, partly as a result of significant media coverage of the issue in recent years, the Ministry of Labour has been increasing enforcement of the unpaid internship rules, and even conducted an “enforcement blitz” in 2014 to target those illegal unpaid internships.
In order to avoid liability, employers should consider seeking legal advice before taking on unpaid interns to ensure that the internship properly complies with the ESA.