As we have previously mentioned, issues relating to unpaid interns continue to be a hot topic. In the wage law arena, disenchanted former interns have brought a string of well-publicized class action lawsuits against their supposed corporate benefactors seeking minimum wage and overtime pay for time purportedly spent – not as “interns” – but as unpaid “employees.” These cases – many of them brought in New York City against high-profile companies in the entertainment, broadcast, and publishing industries – have forced many businesses to reconsider, change or even abandon their unpaid internship programs.

Unpaid interns not only function in the workplace without compensation, but also may do so without the same civil rights protections as paid workers. That reality was recently confirmed by a recent federal court decision in New York City where the court, borrowing from precedents under federal and state anti-discrimination laws, concluded that the New York City Human Rights Law does not protect unpaid interns against sexual harassment and other prohibited discrimination because, without compensation, interns do not qualify as “employees” and thus are not covered by the law.

In the case, a female graduate student took an unpaid internship with the employer, which was a news media company. She performed a variety of tasks, including drafting scripts and making on-camera news reports. During the internship, her supervisor allegedly lured her to his hotel room and assaulted her by grabbing her, trying to kiss her, and groping her. After the intern rejected the advances, she allegedly fell out of favor at the employer, and was ultimately denied a full-time job after she graduated. She then filed suit alleging that she was sexually harassed in violation of the city law and denied employment after graduation because of her sex in violation of both the state and city laws.

In a case of first impression under the city law, which has a broader remedial scope than its federal and state counterparts, the court dismissed the former intern’s sexual harassment claim because she was not compensated. The court concluded that the city law – like federal and state law – protects only “employees” and that compensation is a “threshold issue in determining the existence of an employment relationship.” Consequently, the uncontested absence of remuneration doomed the former intern’s sexual harassment claim. As a job applicant, however, her job denial claims did survive the motion for early dismissal.

The case breaks new ground in New York City, but as the decision reveals, unpaid interns have long found themselves outside the protection of Title VII and most state anti-discrimination laws. Currently, Oregon is the only state that expressly protects unpaid interns from workplace discrimination. That may be about to change. Following the New York decision, proposed reform legislation to extend workplace protections to unpaid interns was immediately introduced in the New York State legislature. The New York City Council will likely follow suit. Expect the same in other state and local jurisdictions as the issues surrounding unpaid internships become a national focus.

Even without legal reform, cases like the recent New York case and its antecedents would seem to have little practical impact. It is not clear that unpaid interns who claim that they should have been paid are unprotected under these anti-discrimination laws. Notably, and notwithstanding allegations that she functioned like a paid worker, the intern did not include wage law claims or otherwise contest her unpaid status. In the meantime, for businesses that properly maintain unpaid interns, it may well be that the rationale for the New York decision will provide some helpful precedent covering proper internship programs. However, in this day and age, such businesses likely have – and are otherwise well-advised to implement – comprehensive anti-discrimination policies that extend to and protect unpaid interns from harassment or other discriminatory conduct in the workplace, even if the law may not.