Unpaid interns have increasingly become a hot topic among lawmakers and courts.  Last week, New York Governor Andrew Cuomo signed into law legislation which prohibits New York State employers from discriminating against, or sexually harassing, unpaid interns.  New York State enacted this legislation only a few months after New York City passed a law which prohibits discrimination against unpaid interns.  New York City unanimously enacted its legislation in response to a district court ruling in October 2013, which found that an intern could not proceed with a sexual harassment claim because she was unpaid, and therefore, she was not entitled to protections under Title VII or the New York City Human Rights Law. (Wang v. Phoenix Satellite Television US, Inc., 976 F. Supp. 2d 527 (S.D.N.Y. 2013)).  Although few jurisdictions currently offer unpaid interns protection from discrimination or sexual harassment (only New York, Oregon and Washington, D.C.), legislators in New Jersey and California have introduced bills which would grant unpaid interns these same protections.  The California bill has already passed the State Assembly and is being reviewed by the State Senate.

New York’s legislation comes at a time when high-profile litigation concerning the rights of interns under the Fair Labor Standards Act (“FLSA”) is winding its way through the courts.  The Second Circuit is working to resolve a split between district courts over the appropriate standard for determining whether an intern is an employee entitled to FLSA protection, and whether interns are entitled to class and collective action certification.  (Glatt v. Fox Searchlight Pictures Inc., 293 F.R.D. 516 (S.D.N.Y. 2013)Wang v. Hearst Corp., 293 F.R.D. 489 (S.D.N.Y. 2013)).  In determining whether interns are entitled to wages under the FLSA, the district judge in Fox looked exclusively to the six factor test contained in Department of Labor Fact Sheet #71 and found that the interns in that matter were entitled to wages, while the judge in Hearst applied a totality of the circumstances approach and found that interns were not entitled to wages.  In the Fox case, the Department of Labor (“DOL”) supported the interns, filing an amicus brief, stating that employers could not circumvent FLSA wage requirements merely by classifying individuals performing entry-level or temporary work as interns or trainees. 

In sharp contrast to New York’s recent legislation protecting intern rights, a recent Wisconsin Supreme Court decision held that the state law that protects whistleblowers who work in the health care industry does not apply to unpaid interns.  (Masri v. Wis. Labor and Indus. Review Comm'n, Wis., No. 2012AP001047, 7/22/14).  The Court found that the statute only protects employees, and unpaid interns do not qualify as employees because they do not receive compensation or tangible benefits.

Employers should be aware of proposed legislation and recent case law concerning interns’ rights in the states in which they operate.  Although only a few jurisdictions currently protect unpaid interns against discrimination and sexual harassment, and courts have held  that unpaid interns are not entitled to protection under Title VII, the recent flurry of activity may indicate a trend towards other states adopting similar legislation.  (See O’Connor v. Davis, 126 F.3d 112, 119 (2d Cir. 1997) (holding that an intern who did not receive compensation or benefits was not entitled to protection under Title VII); Evans v. WASHINGTON CENTER FOR INTERNSHIPS, 587 F.Supp. 2d 148 (D.C. 2008) (holding that unpaid interns are not employees under Title VII, and not within its protections)).  Employers should also closely monitor the Second Circuit decisions in the Fox and Wang cases, as the rulings will likely provide guidance on what test courts will use to determine whether an unpaid intern should be classified as an employee under the FLSA.