Are Unpaid Internships Legal?

Unpaid internships can be deemed as sketchy, even illegal in some cases.  That’s why Bank of Canada Governor, Stephen Poloz’s recent statement needs clarification. As youth unemployment rates have nearly doubled, he suggested that young workers should “get some real life experience…even if it’s for free.”  This may or may not work. To make such a recommendation, the youth must be forewarned about their legal rights and the precautions to take and be alert to avoid being exploited.

 In Ontario, employers do not have to pay students working under a high school co-op placement or an approved post- secondary school program. Unpaid internships are permissible under the following six (6) step criteria:

  1. The training is similar to that which is given in a vocational school;
  2. The training is for the benefit of the intern;
  3. The company derives little, if any, benefit from the activity of the intern;
  4. The training doesn’t take someone else’s job;
  5. The company is not promising a job at the end of training; and
  6. The intern was told that s/he will not be paid for his/her time.

Employers should review their unpaid internships program to ensure that they are in compliance with the criteria set out in the applicable employment standards legislation.

If an internship program does not fall within this scope and does not meet the above six (6) exceptions, the intern is required to be paid at least the Ontario minimum wage, among other things.  Failure to comply can result in penalties to the employers which can range from compliance orders, an order to pay back wages and fines.