Earlier this week Nick Clegg, the Deputy Prime Minister of the United Kingdom, came out swinging against the idea of a ban on the advertising of unpaid internships. This was an interesting development in the ongoing battle against unpaid internships in the U.K. (read about a big win here). Earlier this year, U.K. MP Hazel Blears proposed a private members' bill which would have banned unpaid internships advertisements. You can read her address to Parliament upon the first reading of the Bill here. It should be noted that Mr. Clegg's comments appear to directed to Ms. Blears supporters and intern rights advocacy groups pushing for an advertising ban.
This (rather wonky) blog post is going to explain the law regarding unpaid internships in the U.K., analyze Mr. Clegg's comments, evaluate the idea of an advertising ban as a regulatory tool, and then decide whether such a ban would work in Ontario.
What's the Law in the United Kingdom?
Let us examine the current state of the law in the U.K. First, it must be understood that unpaid internships are largely prohibited under the National Minimum Wage Act 1998; however, it should be noted that a limited number of exclusions apply (i.e. students, high-school co-op positions, and persons working for a charity, voluntary organization, or a fund-raising/statutory body). Second, the key test appears to be that if an intern is regularly doing work for an employer or they are promised a contract or a job then they are entitled to the hourly minimum wage. The foregoing being said, it would appear that most unpaid internships undertaken by university graduates in the U.K. would contravene the National Minimum Wage Act 1998.
So we've established that many unpaid internships in the U.K. would appear to contravene employment standards laws. It has been estimated that there are over 100,000 unpaid interns (a figure which I find very low), so this type of employment is clearly a structural feature of the youth labour market in the United Kingdom. This situation as it currently exists is a classic example of widespread employee misclassification and wage theft - a trend that's repeated both in Canada and the United States.
Mr. Clegg's Opposition to a Ban on Advertising Unpaid Internships
Mr. Clegg makes a number of arguments against a ban on the advertisement of unpaid internships. His arguments essentially boils down to this: outlawing advertisements would give rise to a "black market" which would only benefit youths from wealthy families; and, a ban would have "unintended consequences" that would inhibit social mobility by awarding youths on basis of their family connections. A spokesperson for Mr. Clegg stated that if an intern meets the criteria to be a worker under the national minimum wage law then they are entitled to the minimum wages. The spokesperson also indicated that they want to "bring an end to the 'who you know not what you know' culture."
I don't buy either of these arguments and it reflects a shoddy understanding of how to regulate labour markets. To counter Mr. Clegg's points it appears that there is already a "black market" for illegal unpaid internships in the U.K. and it's pretty clear that youths from wealthy families are being rewarded on the basis of who mommy and daddy knows which fuels the U.K.'s horrific caste system. Given the deep seated problems with social mobility and youth unemployment in the U.K. it's ridiculous that serious policy proposals are being put forward to crack down on unscrupulous employers who are exploiting billions of pounds of unpaid labour from youths every year.
In a setting where there was robust enforcement of employment standards then I could see how arguments against an advertisement ban might be logical, but currently the HM Revenue & Customs, the government agency tasked with enforcing the national minimum wage law, does little, if any, proactive enforcement around the issue of unpaid internships. In fact, the situation has become so desperate that most of the major U.K.'s largest job boards have come together to call for new legislation outlawing the advertising of unpaid internships and remove unpaid internships from their website - it's very odd that large corporations are calling for increased regulation.
Is Banning Advertisements of Unpaid Internships an Effective Regulatory Tool?
To be clear, no jurisdiction has ever attempted to ban the advertisement of unpaid internships. Typically whenever I research a regulatory tool I like to see how other jurisdictions have fared, but this isn't possible in this circumstance. Overall, an advertising ban would probably be an effective tool and I'm going to run through the arguments both for and against a ban.
The arguments against a ban are the following. A ban could discourage firms from offering valuable training because of ignorance about the legalities of offering unpaid internships; particularly, given that there a number of exclusions placing students and voluntary sector interns outside the national minimum wage law there could be decline in these types of legal positions. A ban would take resources, in the form money and staff, to implement and there is an argument that such resources would be better utilized elsewhere. The argument about a "black market" is accurate to extent that it's impossible to completely eliminate any form of prohibited labour as there will always be employees and firms who find it in their interests to subvert employment standards laws - if a ban was implemented some unpaid internships in high-status professions would go "underground".
The arguments for a ban are the following. A ban would deny unscrupulous employers the ability to advertise for illegal positions exploiting youths. An advertising ban would be relatively easy to legislate and implement as what constitutes an (il)legal unpaid internship is already defined and all that's necessary is to set penalties for employers. An advertising ban could be used as both an enforcement tool and as a way to educate employers about the legalities of unpaid internships in the U.K. The overall cost to implement such a ban would be under two million pounds annually and any costs would be be recouped by the government via fines and increased taxes coming in from previously misclassified employees. Social mobility amongst the youth population would eventually be boosted as employers began offering paid internships or training programs. Displacement of paid employees with unpaid interns would be reduced as employers would begin to realize that they have to comply with regulation. Youth unemployment would be reduced as employers would begin offering paid positions rather than unpaid ones. Finally, a ban would blunt the advantage that youths from wealthy families have over ones from historically marginalized groups, which would help develop a society based on meritocracy rather than ancient bloodlines.
One area that has gone explored is how technology has been critical in rapid rise of intern culture in the West. The Internet allows employers to access millions of young workers online with little cost. One major issue in banning advertisements is how to address the anonymity and transnational nature of the Internet. Would a ban simply target employers or would it also target job websites like Workopolis or Craigslist? How could a ban be enforced when a website is operated in another jurisdiction? Is enforcement possible when an employer hides behind the cloak of anonymity?
None of the problems I pose are insurmountable, rather these challenges offer an opportunity for labour market regulators to update enforcement tactics for the realities of the 21st century. Some ideas that might work include introducing fines for third party websites that post unpaid internship advertisements, creating new powers to give investigators the ability to seek ex-parte relief to compel internet service providers and third-party job websites to disclose the ISP addresses and physical locations of employers advertising unpaid internships anonymously, and developing online enforcement strategies that could include online stings where investigators pose as prospective interns.
How Would a Ban Work?
What hooked me on the idea of an advertising ban is the ability to use public policy both as a regulatory device and an educational tool. Given that what constitutes an illegal unpaid internship in the U.K. is well delineated, the actual legislation doesn't have to be complicated. Something as simple as "No employer will advertise a job, contract, or internship that contravenes the provisions and associated regulations of the National Minimum Wage Act 1998" would be effective and there's no need to complicate matters. In terms of penalties, first time offenders should be given a small-fine (i.e. £300.00) and a thorough educational package about the current state of the law pertaining to unpaid internships. From there penalties should escalate quickly into the thousands of pounds for repeat offenders and max out at £50,000.00 for each occurrence. It should be noted that only hard-core exploiters of interns would ever be subject to the maximum fine.
There's another school of thought that could effectively implement a ban without new legislation. The approach would see the HM Revenue & Customs start sending letters to employers who advertise arguably illegal unpaid interns. The letter would politely explain the law, the commitment of the Cameron government to enforcing the national minimum wage law, and alert the employer that further violations may result in an investigation by the HM Revenue & Customs. The approach would utilize the pre-existing powers of the HM Revenue & Customs and avoid further bureaucracy. This isn't really a ban per se, rather it's an innovative operational reform aimed at actually enforcing the national minimum wage law. It's clear that both approaches could work, but the ban doesn't confront the core issues here: rampant employee misclassification and wage theft targeting young workers.
Would an Advertising Ban Work in Ontario?
There is nothing contained in the Employment Standards Act, 2000 that prevents the Ministry of Labour from enacting a de facto ban on illegal unpaid internship advertisements. The Ministry of Labour could easily hire additional Employment Standards Officers (or even upper year law students to save money) to monitor online websites like Craigslist, Kijiji, or Work in Culture for probable illegal unpaid internships and then send out warning letters alerting employers about the law in Ontario and possible future consequences. Receiving a warning letter from the Ministry of Labour is more than enough to bring most offending employers into compliance with the law. For hard-core repeat offenders inspections could be utilized to weasel out violations of the ESA and take enforcement action.
For some reason, the Ministry of Labour is stuck in a 1970s mindset and is refusing to update enforcement tactics for the age of the Internet. While I certainly don't opposed a ban on advertising unpaid internships, I wonder if simply updating operational policy, procedure, training, and enforcement tactics would be a more cost-effective measure. It strikes me that the Ministry of Labour has a lot of tools, but doesn't appear to know how to utilize them in an effective manner.
In Ontario groups such as Students For Jobs Now and the Youth Alliance for Progress are pressing Kathleen Wynne to enact legislative change which would make it illegal to advertise unpaid internships in Ontario. Earlier this summer, the Fair Pay Campaign, pushed for NYU's Wasserman Centre to stop advertising unpaid internships and has also made stopping advertisements a part of their ongoing campaign against unpaid in the U.S.
What do you think about banning the advertisement of unpaid internships? Leave a comment below and we'll discuss this interesting regulatory tool. For more commentary on unpaid internships, see: here, here, here, and here. Finally, check out MP Hazel Blears discussing the impact of unpaid internships in the U.K.
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