A New York federal district court has ruled that a former unpaid intern for Phoenix Satellite Television US, Inc., cannot bring a sexual harassment claim under the New York City Human Rights Law, because the lack of compensation renders her unable to meet the requirement of employee status under the statute.

Judge P. Kevin Castel issued the ruling in Lihuan Wang v. Phoenix Satellite Television US, Inc., on Thursday. The alleged harassment included ongoing social and sexual overtures and physical touching by a bureau chief who supervised the plaintiff’s work.

As reported by Jay-Anne B. Casuga for the BNA’s Daily Labor Report (subscription required):

A female former unpaid broadcasting intern cannot bring a sexual harassment claim under the New York City Human Rights Law because she is not an “employee” within the meaning of the law, a federal judge in New York held Oct. 3, addressing an issue of first impression . . . .

. . . Relying on federal and New York case law, the district court said unpaid interns do not qualify as employees under Title VII of the 1964 Civil Rights Act or the New York State Human Rights Law because of the “absence of remuneration,” which is an “essential condition to the existence of an employer-employee relationship.”

O’Connor v. Davis (1997)

The district court cited favorably to the leading decision on the legal question of whether unpaid interns have standing to sue under employment discrimination laws, O’Connor v. Davis, a 1997 Second Circuit Court of Appeals decision involving a student social work intern who alleged that she was sexually harassed by a staff psychiatrist in the course of an internship with the Rockland Psychiatric Center in New York.

The plaintiff filed suit, claiming, in part, that she was subjected to sexual harassment in violation of Title VII of the federal Civil Rights Act. The Second Circuit Court of Appeals held that O’Connor was not an “employee” within the statutory meaning of Title VII, reasoning that compensation “is an essential condition to the existence of an employer-employee relationship.” The absence of any kind of salary, wages, health insurance, vacation and sick pay, or any promise of such direct or indirect remuneration from Rockland was fatal to O’Connor’s claim of employee status, and consequently, to the Title VII count of her complaint.

EEOC’s position, too

The holding of O’Connor v. Davis apparently represents the current position of the Equal Employment Opportunity Commission, the federal agency charged with interpreting and enforcing America’s employment discrimination laws. Blair Hickman and Christie Thompson reported on this question for ProPublica:

Federal policies echo court rulings. The laws enforced by the U.S. Equal Employment Opportunity Commission, including the Civil Rights Act, don’t cover interns unless they receive “significant remuneration,” according to commission spokesperson Joseph Olivares.

“At least with respect to the federal law that we enforce, an unpaid intern would not be legally protected by our laws prohibiting sexual harassment,” Olivares said in an email to ProPublica.

It’s unclear how many interns are sexually harassed at work. The commission doesn’t keep those statistics, according to Olivares.

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October 7 additional comments: Because I wanted to post news of this case promptly, I didn’t spend a lot of time parsing out the legal and policy implications. But I’d like to add a few words now.

The court’s holding in this case raises the related issue of whether or not unpaid internships violate federal and state minimum wage laws, a topic that I’ve addressed frequently on this blog, such as this report on the June 2013 Glatt v. Fox Searchlight Pictures decision in which a federal district court held that unpaid interns were entitled to back pay. In instances where an unpaid intern should’ve been paid under the law, the employer benefits two-fold by claiming the lack of pay renders an intern unable to bring a discrimination or sexual harassment claim, no matter how bad the underlying alleged behavior. By not paying an intern in violation of the law, the employer also may escape liability for discrimination or sexual harassment. How’s that for a bad result?!

I soon will be posting a draft of a new law review article that discusses the many recent legal, policy, and advocacy developments concerning the internship economy. It will serve as an update and sequel to my 2002 article, “The Employment Law Rights of Student Interns” (Connecticut Law Review), that discusses the above-mentioned O’Connor v. Davis decision in some detail.

For reasons I explain in my forthcoming article, I believe that the question of covering interns under employment discrimination laws should be dealt with separately from the issues of compensation under minimum wage laws.

This article was originally printed on Minding the Workplace on October 5, 2013.  Reprinted with permission.

About the Author: David Yamada is a tenured Professor of Law and Director of the New Workplace Institute at Suffolk University Law School in Boston.  He is an internationally recognized authority on the legal aspects of workplace bullying, and he is author of model anti-bullying legislation — dubbed the Healthy Workplace Bill — that has become the template for law reform efforts across the country.  In addition to teaching at Suffolk, he holds numerous leadership positions in non-profit and policy advocacy organizations.