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What Every Employer Needs to Know Before Hiring an Intern

03/17/2014 06:01 EDT | Updated 05/18/2014 05:59 EDT

We've seen a surge of stories in the news recently reporting on the issue of unpaid internships, including a new private members bill, Bill 170, which was introduced March 4, 2014 by MPP Jonah Schein. If passed, Bill 170 will amend the Employment Standards Act, 2000 to provide greater protections to unpaid interns, including limits on hours of work; and entitlements to eating periods, vacation, and leaves of absence.

Whether this bill is passed or not remains to be seen, but one thing is for certain: the Ministry of Labour is paying more and more attention to the issue of unpaid internships. With this in mind, it becomes increasingly important for employers to understand the laws surrounding unpaid internships, and to know what steps they can take to ensure they remain protected under law.

At Rubin Thomlinson LLP we see these issues quite frequently, and often employers are not as well versed in the issue as they should be. It's important for employers to familiarize themselves with the laws around internships, not only to ensure that they're treating these individuals fairly, but also to ensure they're protected against any potential lawsuits and claims by conducting themselves in a lawful manner.

An unpaid intern may seem like a great idea, but there are a couple of key points to keep in mind if your organization is looking to take one on:

1. What is the definition of an unpaid intern? The truth is there is no specific definition of "unpaid intern," which is why employers need to be so careful. If the individual is not a university student or a secondary school student in an approved program, they fall under a third, less clear category and must fulfill the following six requirements in order to be exempt from "employee" status:

• The training is similar to that which is given in a vocational school

• The training is for the benefit of the intern

• The employer gets little, or no benefit from the activity of the intern while they are being trained

• The intern does not displace any employees within the organization

• The intern is not given a right to become an employee of the organization

• The intern is advised that he or she will receive no compensation for the time that they spend in training

If the individual does not fulfill these requirements, he or she is an employee by definition.

2. What protections do interns have? Currently, unpaid interns are not covered by the protections of the Occupational Health and Safety Act, however Bill 146, a bill introduced by the Ontario government last year, proposes a number of amendments to employment-related legislation, including an expanded definition of "worker," which would include unpaid interns. Employers should pay close attention to this Bill 146 and the protections contemplated by Bill 170 in particular, but should also consider that we're poised to see some major changes nonetheless given the increasing attention the issue is getting.

3. Is calling a worker an 'intern' sufficient? Simply put, no. Many businesses mistakenly assume that their unpaid interns fit under the third category described above, but the conditions of that category are not easy to fulfill, particularly the condition that the person providing the training derives little benefit from the intern's work. If an unpaid intern is not part of an authorized program through a school board, college or university, and does not meet the stringent requirements of the third category, the intern is actually an employee.

4. What if the intern is, in fact, an employee? If your intern does not fall under one of the definitions provided, they are deemed to be an employee and therefore are entitled to minimum wage (at the very least). They are also entitled to other protections under the Employment Standards Act, 2000, including notice of termination, holidays, restrictions on hours of work and more.

In our experience, the largest misconception of employers is that of viewing an unpaid intern as a cost-effective way to increase productivity without changing the bottom line. While this may seem like a great idea at first, the vast majority of internships that are not approved by an educational institution do not meet the requirements outlined above. In such cases, these internships are illegal and may end up costing your organization much more in the long run.

For additional direction or information, contact an expert who can help you better understand the existing laws around internships and who can help to prepare your business in the face of increased scrutiny and policy changes.

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