Why it matters: Are unpaid interns protected by employment laws? The answer depends. In response to a court decision finding that interns were not protected in the state of New York, Governor Andrew Cuomo recently signed a new law adding unpaid interns to the state’s anti-discrimination laws, joining other jurisdictions such as Oregon and Washington, D.C. But on the same day, the Wisconsin Supreme Court held that unpaid interns are not entitled to anti-retaliation protections under the laws of that state. Between the question of whether interns should be legally considered employees or independent contractors and the issue of whether anti-discrimination laws apply, the use of interns poses serious concerns for employers.

Detailed Discussion

Last year a federal court judge in New York granted summary judgment for an employer in a case brought by a former unpaid intern who alleged she had been sexually harassed while on the job. In what the court called an issue of first impression in New York courts and the Second U.S. Circuit Court of Appeals, the judge determined that the anti-discrimination laws relied upon by the plaintiff did not apply.

“The plain terms of [New York City law] make clear that the provision’s coverage only extends to employees, for an ‘employer’ logically cannot discriminate against a person in the ‘conditions or privileges of employment’ if no employment relationship exists,” U.S. District Court Judge P. Kevin Castel wrote in Wang v. Phoenix Satellite Television.

In response, the New York City Council voted unanimously to prohibit discrimination against unpaid interns, tweaking the definition of “employee” to include “an individual who performs work for an employer on a temporary basis whose work provides or supplements training given in an educational environment where the employability of the individual performing the work may be enhanced, experience is provided for the benefit of the individual performing the work, and the work is performed under the close supervision of staff.”

State lawmakers followed suit, enacting legislation to provide civil rights protections for interns prohibiting discrimination “because of the intern’s age, race, creed, color, national origin, sexual orientation, military status, sex, disability, predisposing genetic characteristics, marital status, or domestic violence victim status.”

Gov. Cuomo signed the bill into law without comment.

On the opposite end of the spectrum, the Wisconsin Supreme Court affirmed dismissal of an intern’s suit, agreeing with lower courts and the state’s Labor and Industry Review Commission (LIRC) that unpaid interns are not entitled to the anti-retaliation protections of state statute.

Asma Masri was a doctoral student at the University of Wisconsin-Milwaukee with a position as a “Psychologist Intern” in the Division of Transplant Surgery at the Medical College of Wisconsin. She claimed that she was terminated after reporting certain clinical and ethical concerns to an administrator and filed a charge against the hospital (no hospital mentioned to this point). She relied upon a provision that states employers may not take “disciplinary action against . . . any person” who in good faith reports violations of state or federal laws, regulations, or standards.

But the hospital (see above) said the law defined “disciplinary action” as “any action taken with respect to an employee.” As Masri was not an employee, the hospital (see above) argued it could not take “disciplinary action” against her pursuant to the statute and therefore she could not avail herself of its protections.

The Wisconsin Supreme Court agreed. Affirming holdings from the LIRC, a trial court, and an appellate panel, the court said the language, structure, and context of the state law “addresses only one category of people bringing complaints: employees.” Only employees are subject to “disciplinary action,” the court noted, and “[t]he lack of remedies for unpaid interns demonstrates that it is highly unlikely that unpaid interns fall under the anti-retaliation protections of [the law].”

Masri said her 40-hour-per-week schedule, her all-access badge to the hospital (see prior pg.), office space, support staff, and networking opportunities all constituted tangible benefits that made her an employee.

While noting that it might be possible to be an employee based on tangible benefits other than salary, the court found Masri’s perks were insufficient. “If these benefits were enough to confer employee status on Masri, it seems that almost any unpaid worker would be considered an employee,” the court wrote.

The court also rejected her public policy argument that the remedial purpose of the statute warranted an expansive definition of employee, or interns would be less likely to report ethical violations absent statutory protections.

“Masri advances legitimate policy interests, but the effect of her argument is to engraft purposes onto the statute that are not embedded in its text,” the court said. “Public policy is not a panacea for perceived shortcomings in legislative determinations. Nothing in the statute evinces a purpose to protect unpaid interns.”

To read New York’s new law, click here

To read the decision in Masri v. State Labor & Indus. Review Commission, click here.