New Rules Governing Unpaid Interns in Federally Regulated Workplaces

In December 2017, legislative amendments under the Budget Implementation Act, 2017, No. 2 (introduced as Bill C-63), to Part III (employment standards) of the Canada Labour Code (the Code) to limit unpaid internships in the federally regulated sector to only those that are part of an educational program were enacted but did not come into force right away. On June 8, 2019, the federal government published proposed regulations in the Canada Gazette to extend standard health and safety protections to unpaid interns and to enact supporting regulations regarding limitations to internships under Part III of the Canada Labour Code.

The Regulations published in the Canada Gazette, Part I, Volume 153, Number 23: Standards for Work-Integrated Learning Activities Regulations clarify when an internship can be unpaid by establishing the process to be followed and specify the applicable minimum employment standards protections, among other considerations.

Federally regulated sectors include activities like banking, telecommunications, broadcasting and some areas of transportation, but not the federal civil service/public sector.

The goal of the legislative and regulatory changes is to eliminate exploitative unpaid internships.

According to the proposed Regulations, the Canada Labour Code will recognize interns in two ways:

1. Students undertaking a work-integrated learning placement with an employer to fulfill the requirements of an educational program may be unpaid, but they will be entitled to certain employment standards protections prescribed in regulations. Students registered in secondary, post-secondary and vocational educational institutions, or their equivalents outside of Canada, will be covered.
2. All other individuals undertaking placements with employers to obtain knowledge or experience will be treated as employees and will, therefore, be covered by all employment standards protections, including the right to be paid at least the minimum wage.

Specifically, and as stated in the Regulations, the following requirements will be established:

1. The process for determining that a student placement can be unpaid

The proposed Regulations would require that for a student placement to begin, the student would be required to provide the employer with documents issued by the educational institution that contain the following information:

• the name and address of the educational institution;
• the name of the student and the program of enrolment;
• the name and address of the employer for which the activities would be performed;
• a description of the work-integrated learning activities that fulfill requirements of a program;
• the start date and either the end date or the total number of hours of the work-integrated learning activities; and</li
• the title and contact information of the program administrator.

An educational institutions covered by the legislation and regulation would be defined and referenced. For post-secondary and vocational educational institutions, the proposed Regulations would incorporate by reference the Directory of Educational Institutions in Canada, which provides a list of recognized educational institutions in Canada. The Directory is maintained by the Canadian Information Centre for International Credentials, in close collaboration with competent authorities responsible for education in the provinces and territories.

2. The minimum employment standards protections for students in work-integrated learning

The proposed Regulations list the minimum employment standards protections under Part III of the Code that apply to interns as well as how they apply, and include:

• a limit of 40 hours/week and 8 hours/day, with at least one day of rest per week;
• the right to a modified work schedule;
• 9 general holidays within a calendar year;
• maternity-related reassignment;
• protected leaves (i.e. personal leave, leave for victims of family violence, leave for traditional Aboriginal practices, bereavement leave, medical leave and leave for work-related illness and injury); and
• protections against genetic discrimination and prohibited reprisals.

In addition, the minimum employment standards protections that were recently introduced under the Budget Implementation Act, 2018, No. 2 (Bill C-86) and that will come into force September 1, 2019, apply to internships and include:

• unpaid breaks for every period of 5 hours of work;
• unpaid breaks for medical reasons or nursing;
• 96 hours’ advance notice of a schedule; and
• 8-hour rest periods between shifts.

It is also noted that the protections against sexual harassment also applies to interns until the new framework for the prevention of harassment and violence under Part II (under An Act to amend the Canada Labour Code [harassment and violence], the Parliamentary Employment and Staff Relations Act and the Budget Implementation Act, 2017, No. 1, (introduced as Bill C-65)) of the Code comes into force. This will ensure that there is no gap in coverage for students in work-integrated learning. The violence and harassment provisions are expected to come into force in 2020.

3. Related administrative requirements

The proposed Regulations would specify record-keeping requirements with respect to students in work-integrated learning. The employer would be required to keep, for at least three years after the placement, the documents issued by the educational institution as well as written records such as hours in the workplace, general holidays granted and days of any leave taken.

Impacts and costs of the changes on employers

According to the government and as stated in the proposed Regulation, these changes are expected to entail limited compliance and administrative costs for employers in the federally regulated private sector. Some small administrative costs would also be carried by educational institutions. A substantial portion of these costs would be related to the record-keeping requirement for determining that a student placement is a formal part of an educational program. The total anticipated cost is $418,018, which can be broken down as follows:

• Educational institutions would be required to issue documents that contain a set of prescribed details about any unpaid placements. This would entail anticipated administrative incremental costs of approximately $37,882.
• Employers in the federally regulated private sector would assume an initial compliance cost arising from the need to familiarize their human resources personnel with the changes introduced by the proposed Regulations, such as the employment standards protections that unpaid students would receive. The present value of this one-time incremental cost is estimated at about $243,885.
• Employers in the federally regulated private sector hosting unpaid students would also carry incremental administrative costs of approximately $136,251 due to the need to verify and file documentation for the new record-keeping requirements introduced by the proposed Regulations.

Since employers in the federally regulated private sector are already required to keep records about their employees, the record-keeping requirements for students participating in work-integrated learning would not impose an additional administrative burden, with the exception of the filing of the documents issued by the educational institution.

Coming into force and last words

Unpaid interns in federally regulated workplaces are getting closer to having some of the same minimum employment standards protections paid employees get.The anticipated coming into force of the new provisions (legislation and regulation) for interns is sometime in 2020.

The government hopes that the proposed Regulations foster a work environment where employers, students and educational institutions can leverage work-integrated learning opportunities more confidently, promote a culture of trust and accountability conducive to stable and productive workplaces. The proposed Regulations is expected to:

• Enable students in unpaid work-integrated learning to enjoy, for the first time, a set of important employment standards protections;
• Clarify the status of students in unpaid work-integrated learning roles in the workplace, and related employer obligations; and
• Remove ambiguity by ensuring that any other intern is paid and enjoys full employment standards protections.

According to Hassan Yussuff, the president of the Canadian Labour Congress, “allowing unpaid internships only if the interns get educational credit for their work experience strikes a balance between compensating students and allowing them to have good learning experiences in the [federally regulated] private sector.” However, he did indicate to the Media that his organization is “deeply worried” that other provincial and territorial jurisdictions don’t have regulations adequately dealing with unpaid interns, but he hopes they will learn from the federal regulations.