To pay or not to pay? For several years now, that question has vexed employers large and small, for-profit and not-for-profit, when deciding how and whether to compensate the individuals participating in their internship programs. What had once been a source of inexpensive and, in many cases, free labor turned into an arrangement more risky than rewarding, as a spate of wage-and-hour class actions were filed on behalf of interns across the country. Now, another issue is coming to the forefront as a number of jurisdictions, including both New York State and New York City, are extending equal employment opportunity protections to interns as well.

Until recently, unpaid interns could not avail themselves of the protections or remedies afforded regular employees by fair employment harassment laws. This gap in the law came to light two years ago when a New York federal court held that Lihuan Wang, an unpaid intern, could not proceed with a sexual harassment claim against Phoenix Satellite Television (PSTV), a company that produces television news geared towards Chinese- language audiences. Wang, a 22-year-old master's degree student in the Broadcast and Digital Journalism program at Syracuse University, claimed that the male New York bureau chief made a number of inappropriate and offensive comments to her, propositioned her and ultimately attempted to sexually assault her in his hotel room. After she rejected the bureau chief's advances, Wang claims that PSTV ceased offering future employment opportunities to her. Although the court in Wang v. Phoenix Satellite Television US Inc., 976 F. Supp. 2d 527 (S.D.N.Y. 2013), allowed Wang to proceed with her failure-to-hire claim, it dismissed her hostile work environment claim, concluding that the New York City Human Rights Law's protection of employees does not extend to unpaid interns.

In response to the Wang case and the increased attention on the lack of legal protections afforded unpaid interns, Mayor Bill de Blasio signed an amendment to the New York City Human Rights Law on April 15, 2015, adding protections for both paid and unpaid interns. Under this amendment, "intern" shall mean "an individual who performs work for an employer for the purpose of training if: (a) the individual works for a fixed period of time at the end of which there is no expectation of employment; (b) the individual performing the work is not entitled to wages for the work performed; and (c) the work performed: (i) supplements training given in an educational environment that may enhance the employability of the intern; (ii) provides experience for the benefit of the individual performing the work; (iii) does not displace regular employees; and (iv) is performed under the close supervision of existing staff." As a result of the amendment, interns may now assert statutory claims of sexual harassment, as well as unlawful discrimination.

The New York State Legislature similarly expanded the coverage of the New York State Human Rights Law to encompass unpaid interns, in an amendment that went into effect on July 22, 2014. Under the State Human Rights Law, employers are prohibited from engaging in sexually harassing conduct, and the law further protects unpaid interns against discrimination based on age, race, creed, color, national origin, sexual orientation, military status, sex, disability, genetic predisposition or carrier status, marital status, and domestic violence victim status.

Given the expansion of the laws in New York City and in the state, employers are encouraged to review and amend their internship policies to ensure that they are in compliance with all aspects of the law.