Lost in Transition: the Impact of Unpaid Internships on Ontario's Youths

Earlier this week I gave a talk at the annual conference of the Ontario Justice Education Network ("OJEN"). David Doorey, a labour law professor at York University and my former research supervisor, was also on the panel. Below is the text and a video of my talk. I focused on two main areas: the impact of unpaid internships on youths and an explanation of the current state of the law in Ontario vis-a-vis unpaid internships.

As the scholarship around unpaid interns progresses the depth of analysis will undoubtedly become more sophisticated. Even over the last few month I've noticed a heightened level level of discourse in much of the commentary I've read and great deal of nuance is beginning to appear which allows us to trace the terrain of intern culture with more precision.

The audience at the OJEN conference was composed of high school law teachers, so Professor Doorey's presentation focused on how to construct a lesson plan to teach high school students about unpaid internships. He structured his talk around five questions which provide a framework to interrogate laws and the power structures behind them, these questions are: (1) "What would happen if we had no laws?"; (2) "What problem is the government trying to solve?"; (3) "How does the legal rule chose address the problem?"; (4) "Who benefits (and who does not) from the protective legal solution chosen?"; and, (5) "How would you eliminate or change the law?". If you're a high school teacher or academic interested in teaching your students about unpaid internships, Professor Doorey's approach is a good departure point for explaining how the law currently works.

LOST IN TRANSITION: THE IMPACT OF UNPAID INTERNSHIPS ON ONTARIO'S YOUTHS

1. INTRODUCTION

Good afternoon.

Professor Doorey and I have been asked to say a few words about unpaid internships in Ontario. We’re going to split the talk up into three distinct parts. First, I’m going to run through a brief introduction to the topic of internships and then explain the law in Ontario. Then Professor Doorey will run through how to structure a lesson plan to teach students about unpaid internships. After Professor Doorey is done speaking we’ve set aside some time for questions and discussion as both of us would love to hear your perspective on this issue.

Throughout this talk I’m going to frame this issue as one that very much implicates serious questions about the current state of public policy vis-a-vis post-secondary education and Canada’s youth labour market. At the core, our society’s approach to unpaid internships and the school-to-labour market transition is a good bellwether for how Ontario approaches public policy towards youths and intergenerational equity.

I want unequivocally state that there’s question that internships are an incredibly valuable bridging tool in the school-to-labour market transition and no one really disputes the benefits of the internship model. That being said, unpaid internships are quite problematic with deep economic, social, and political impacts.

2. THE RISE OF INTERN CULTURE: HISTORY & IMPACTS

History of Internships of North America

So where did internships come from?

Internships first emerged as a form of job training in North America during the late 1800s. Adapted from German medical education internships were popularized by Sir William Osler, the famed Canadian doctor and medical educator, while he was professor at McGill and John Hopkins. Internships bear a direct lineage to the apprenticeships used for hundreds of years by craft guilds in Europe and imported to North America during the period of colonization.

Internships remained mainly a phenomena of the medical profession until the middle of the 20th century when this form of training started gaining prominence in high-status industries like politics, advertising, public administration, and many other fields - internships of this era provided mainly White males with an intensive period of training which often led to entry to well paying permanent jobs.

What Are Internships?

So what are internships?

There’s no standard definition of what an internship is. It can describe anything ranging from an informal job-shadowing lasting a few days to a entry-level contract position lasting a year or more. Ross Perlin, the author of Intern Nation, states that “the very significance of the word intern lies in its ambiguity. It represents a broader concept, and sends out a more targeted social signal, than “temp” or “freelancer” ever has.”

The definition I’m most comfortable with is the following. Internships are a temporary form of employment for young people which may be paid (or unpaid) and might have an educational or training component to them. Unpaid internships at the core are a pre-job, a form of pre-employment vetting that allows the employer and intern the chance to “test-drive” a workplace - it's a new form of employment for today’s stressed millennial generation.

The Rise of the Intern

Today’s internships aren’t like those of the past, while one can certainly still find examples of high-quality internships, the trend in the labour market points to the reality that interns are a form of precarious employment that’s heavy on grunt work and light on education or training. The pay is often minimal or nonexistent, benefits are a rarity, and there’s almost no job security. In the wake of the global financial crisis, many employers have used the bad economy as an excuse to cut labour costs and begin exploiting young workers via the use of unpaid labour.

Within Ontario’s labour market there has been a troubling long term trend towards precarious employment - this being jobs with low job security, little control over the conditions of work, negligible regulatory protection, and an income level that’s below a living wage - examples of precarious employment abound such as a temp agencies, short-term contracts, project based work, and of course internships.

Over the past ten years we’ve seen an explosion of unpaid internships in the labour market to the point where I’ve estimated that each year in Ontario there are approximately 100,000 illegal unpaid internships, this estimate is a separate figure from the hundreds of thousands of internships that students complete as part of formal education programs every academic year in Canada.

The Impact Arising From Internships

Now I’m going to spend a moment discussing some of the impacts arising from unpaid internships.

We're seeing the erosion of the entry-level position and paid employees being replaced with unpaid interns. Unpaid internships have a direct impact on the economy through contributing to youth unemployment, driving down wages, slowing economic growth, and allowing employers to replace paid employees with unpaid, vulnerable young workers or recent immigrants. One point here, while my comments today focus on the youth angle, there’s a separate narrative relating to employers exploiting the unpaid labour of immigrants - the Ontario Human Rights Commission recently address this point in a policy on “Canadian experience”.

In a market economy that is predominantly consumer driven if you have a large chunk of the youth population foregoing wages for prolonged periods you're going to see structural problems that start to impact demographic trends - such as household formation, house purchasing, birthrate, boomerang kids - and the wider economy. The rapid ascent of intern culture in Canada isn't a particularly good development for anyone except employers who are obtaining a lot of free labour.

We're at the point where unpaid internships can be found in almost any industry with a high level of unpaid labour occurring in fashion, journalism, new media, law, social work, education, academia, health sciences, and public relations industries. There's a skew towards requiring unpaid labour from young workers in traditionally female dominated professions and at broader public sector employers such as hospitals, post-secondary institutions, and school boards (consider the amount obtain via student teachers and new graduates volunteering to gain experience). The reality is that young workers are providing billions of dollars in unpaid labour each year to employers.

Canada is in a slow-growth period and will be for the remainder of the decade. Eventually you will see the baby boomers start to retire en masse, but that won't be for awhile. The real youth unemployment rate in the 15 to 24 cohort is 20.9% and we're seeing a lot of un(der)employment and precarious work being pushed on youths. A lot of growth in the economy is in the service and retail sectors, but the wages in those sectors don't allow youths to build a live for themselves.

Unpaid internships also implicate a series of problems linked to socio-economic class and social mobility. Students coming from historically marginalized populations and lower socioeconomic classes often don't have the ability to engage in unpaid labour. These barriers are an insidious problem that's leading to a creeping cultural apartheid that blocks students from entering high-status professions (such as law, finance, politics, journalism) that control Canada's economic, social, and political levers. What we're seeing is that students from wealthy families are being rewarded with positions on the basis of their birth-status which erodes any semblance of a meritocracy.

3. THE LAW ON INTERNSHIPS IN ONTARIO

So what is workplace law?

So what is and where does Workplace Law Come From? We’re going to start exploring the law with a simple explanation about where workplace comes from. In Canada, the legal system operates under the Common law system, which we inherited from the United Kingdom. The regulation of employment in Canada is mainly a provincial responsibility, rather than a Federal one. Workplace law in Ontario comes from a variety of sources. There are various aspects of workplace law which taken together form an overarching legal framework.

Under a common law system the legislature passes and enact statutes which outlines the law in broad-strokes and may enact technical regulations on a topic as well via orders from the Cabinet. These laws then get interpreted by the Courts, arbitrators, and administrative tribunals which gives rise to case law and precedence. Case law - the decisions arising from judge, arbitrators, and tribunal members - is an extremely important part of workplace law. These decisions interpret the laws and gives a great deal of context to workplace law.

Let’s run through the different parts of workplace law. Labour law deals with labour relations in unionized environments. Employment law deals with interactions between employers and employees when there is no union and sets out the minimum floor of rights that all workers enjoy. Human rights laws address issues like harassment, discrimination, racism, and sexism. Workers’ compensation laws provide for workers who have injured on the job. Occupational health and safety laws protect workers from unsafe situations in the workplace. Ontario has statutes in each of these areas and these are the main sources of workplace law. Some additional statutory sources of workplace law include the Canadian Charter of Rights and Freedoms, privacy laws, and the Constitution. These laws don’t explicitly speak to the issue of unpaid internships, but are highly important statutes which have impacted on the development of workplace law in Ontario.

Employment Standards and Internships in Ontario

Ontario’s workplace laws weren’t designed to address the complexity of the 21st century labour market, rather our workplace law is rooted in the realities of Canada’s economy in the early to mid-20th century where workers enjoyed good wages, job security, and families could be supported on one income.

What we're seeing a lot of governments (both domestically and internationally) are unprepared or unwilling to address the realities of precarious employment and are playing catch-up on the issue of unpaid internships. In Ontario, the Ministry of Labour and their political masters have done little to address the issue of unpaid internships and it's having quite a detrimental impact on the overall economy. On a side note, earlier this year I caught the Parliamentary Secretary to the Minister of Labour, the second highest ranking position at the Ministry of Labour, advertising for an unpaid internship.

The law governing unpaid internships is contained in the Employment Standards Act, 2000 (the "ESA"). This act contains the minimum floor of rights that workers enjoy such as the minimum wage, hours of work, vacation time, breaks, and right to overtime pay. The ESA, as it’s commonly known, doesn’t cover all types of workers - some groups are excluded completely from the ESA or have certain rights restricted.

A few points need to be made about the ESA. This is a socially protective piece of law which was designed to give workers minimum rights in the workplace. The ESA contains two provisions critical to protecting interns: first, there’s a prohibition on employers and employees from contracting out from the minimum provisions contained in the Act - this means that you can’t undertake “work” for free under normal circumstances; second, there’s a provision setting out that employees need to be paid an hourly minimum wage.

The dual legal narrative related to unpaid internships is one of wage theft, employers not paying wages to young workers, and of misclassification, the concept that employers engage in a form of “mischief” to convince an employee that they aren’t entitled to the hourly minimum wage.

In examining the law we’re going to focus on how interns can have certain rights restricted and then examine the other kinds of workplace law. There are three limited statutory exclusions in Ontario that allow for employers to use unpaid interns. We’re going to examine each of these exclusions in depth. The exclusion arise from who is considered an employee under the ESA and hence able to access the protections and the individuals who are placed outside the protection of this Act.

Student Exclusion

If students are completing an academic program that  has a requirement relating to unpaid internship or unpaid work then they don’t have to be paid. High-school and post-secondary students are excluded from employment standards protection under subs. 3(5) of the ESA if they are completing a bona fide academic requirement or undertaking a work experience. The bottom-line is that any unpaid labour must relate to an academic degree requirement that is linked to explicit language set out in the academic calendar or explicitly approved by a school board such as a co-op position.

Trainee Exclusion 

The definition of an employee under the ESA states that a person receiving training is an employee unless a strict set of criteria are met. The provision under subs. 1(2) of the ESA speaks to "persons receiving training" and covers unpaid internships. There is a six-pronged test that lays out the grounds pertaining to under what circumstances a person can be excluded from the protection of the ESA. The test is very strict and has six components - all of which must be met if an employer wants to exclude a person from the ESA.

The six components are: (1) the training must be similar to that given in a vocational school; (2) the training must benefit the intern; (3) the employer derives little, if any, benefit from the activity of the intern; (4) the intern can’t replace a paid employee; (5) the employer can’t promise the intern a job once the internship is finished; and, (6) the intern can’t receive pay or any other form of remuneration (i.e. travel costs, expenses, stipends, honourarium). Problems typically arise for employers under the parts of the test dealing with benefits derived from the intern, receiving some form of remuneration, and the training being similar to a vocational school.

There have been a dozen cases considering these rules. In every case (except one) the employer lost and had to pay back wages. The single case where an employer met the criteria essentially mimicked a vocational training program. The vast majority of unpaid internships done outside the auspices of high-school, college, or university program are illegal and contravene the ESA.

Professional Exclusion

There's a third category that relates to students in training for professional careers that is listed under subs. 2(1) of Ontario Regulation 285/01. Approximately twenty-five professions (such as lawyers, architects, psychologists, teachers) are listed and are excluded from the parts VII, VIII, IX, X, and XI of the ESA. These provisions exclude people from protections related to hours of work, eating periods, overtime pay, minimum wage, public holidays, and vacation with pay. The case law is clear that this exclusion only applies to person actively training for these professions. Unpaid internships in these professions are considered "legal", but there have been no lawsuits considering this issue or testing the statute itself. So while these people are considered to be employees under the ESA, they have no “right” to critical protections under the ESA and shockingly little legal recourse.

Coverage Under Other Pieces of Workplace Law

Under workplace law, other than the ESA there is general presumption that a person undertaking work on behalf of an employer will fall under socially protective laws. Interns are covered under Ontario’s Human Rights Code and are essentially considered to be employees. These protections was confirmed recently in a decision from the Human Rights Tribunal of Ontario. Under the Occupational Health and Safety Act and the Workplace Safety and Insurance Act, 1997 it appears that the vast majority of interns, whether they are paid or unpaid, would be covered under the protections extended under these laws. Under the Labour Relations Act there are no barriers to having unionized interns and the Ontario Public Service currently has dozens of unionized interns; however, some employers and unions have decided to place interns outside the ambit of collective agreements.

So What Does All Mean?

In closing, I’m going to suggest that Ontario has created a statutory architecture, mostly due to inaction and willful ignorance, that leaves young workers particularly vulnerable to exploitation at the outset of their careers. In my estimation the vast majority of unpaid internships in Ontario are illegal and these positions provide employers billions of dollars in free labour each year.

There’s a role for all of you as teachers in all of this to prepare today’s youths to be able to navigate the rapidly changing labour market in Canada. Work is an integral part of many people’s lives - it gives us purpose, provides the means to the necessities of life, and occupies a great deal  of our time - youths need to be able to face these realities head-on and advocate for themselves. My suggestion is that you teach your students about the realities of our labour markets and impart skills and knowledge that will allow them to survive and flourish.

In a society as wealthy as ours this is inexcusable and this exploitation is inflicting terrible damage to Ontario’s social fabric. Something is very wrong when countless commentators, politicians, and business types call the millennial generation “lazy” or “entitled”, yet corporations demand months or years of free labour before they start paying. It’s simply not fair and offensive to any notion of equality or intergenerational equity - the time has come for business and government to get into the habit of paying their interns - anything less is unacceptable.

Thanks, that’s all I have for today.