Could it happen here? Interns sue in New York

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It’s graduation season so this year’s entry level workers are ready to start making their way. Unpaid internships are popular, but could they get your company in trouble?

A former intern at Harper's Bazaar says her internship violates labour laws because it was unpaid, according to a lawsuit filed in federal court in New York on Wednesday.

Xuedan Wang, 28, was an intern at the magazine's accessories department from August to December last year, where she reportedly worked at least 40 hours per week, and sometimes as much as 55 hours, without pay.

The debate around unpaid internships in Canada was sparked last year when Toronto lawyer Andrew Langille estimated that 95% of unpaid internships in Ontario were probably illegal.

Internships are only allowed to be unpaid when run through co-op programs or official work programs approved by a college of applied arts and technology or a university. The only other situation where a company can hire an unpaid intern is if all six of these conditions are met:
 

  1. The training is similar to that given in a vocational school.
     
  2. The training is for the benefit of the individual.
     
  3. The person providing the training derives little, if any, benefit from the activity of the individual while he/she is being trained.
     
  4. The individual does not displace paid employees of the person providing the training.
     
  5. The individual is not accorded a right to become a future employee of the person providing the training.
     
  6. The individual is advised that he or she will receive no compensation for the time that he or she spends in training.
     

If the position doesn’t meet all of these requirements then the intern is considered an employee and their position is covered by the Employment Standards Act (ESA) so they must be paid at least the Ontario minimum wage.

The third point is one to focus on: the person (or organization) doing the training largely cannot benefit from the trainee’s activity. If your intern is making copies, doing research or writing articles – all activities that would otherwise have to be completed by a staff member – then you should be paying them.

The trainee may also be displacing other employees or potential entry level hires, especially given the practice some companies have of extending a short term unpaid internship for a year or more, Langille says.

“Employers can easily exploit the legislation and call entry level workers interns. We’ve seen the term ‘independent contractor’ similarly abused by some employers trying to avoid ESA requirements.”

Langille says a civil case or class action is unlikely because it’s seen as “career suicide”, but if you’re thinking of taking on unpaid interns make sure the position makes the grade, or you could be setting your organization up for future strife.
 

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  • Jessa Chapman on 2012-06-05 5:27:23 AM

    Shhh... we rely on unpaid interns but break #2 and #5 quite often. It's not a given that they'll get a job but probably 50% of our interns end up working for us in paid positions!

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