So you may have heard – a federal court in New York has dismissed an unpaid intern’s hostile work environment sexual harassment claim against a media company pursuant to the New York City Human Rights Law (“NYCHRL”).  (Wang v. Phoenix Satellite Television US, Inc., Case No. 1:13-cv-00218-PKC (S.D.N.Y. 2013).)  In granting the defendant’s motion to dismiss the plaintiff’s harassment claim, U.S. District Judge P. Kevin Castel found that because the plaintiff was not paid, she was not an “employee,” as that term is defined under the NYCHRL.

But what does it all mean, and what are employers to take from this decision?

The Facts

The plaintiff, Lihuan Wang, was a 22-year-old Master’s degree student in the Broadcast and Digital Journalism program at Syracuse University.  In December 2009, she began a month-long unpaid internship with the defendant, Phoenix Satellite Television US, Inc. (“Phoenix”), an American subsidiary of a Hong Kong-based media conglomerate.  As an intern, Wang’s responsibilities included assisting the New York bureau’s news reporters with shooting news footage, drafting scripts, and editing video footage recorded in the field.  Ms. Wang claimed that the internship was intended to be an opportunity to provide her with training and to serve as a potential springboard for future employment with Phoenix.

Shortly after beginning her internship, Wang and several coworkers attended lunch with Zhengzhu Liu, the head of Phoenix’s Washington, D.C. bureau, who also oversaw the New York bureau and had interviewed Wang in connection with her application for the internship.  According to Wang, Liu invited her back to his hotel, where he needed to drop off his belongings.  During the ride to the hotel Liu purportedly made several inappropriate comments.  When they got to his hotel room, Liu allegedly grabbed and tried to kiss Wang.  She rebuffed his advances and quickly left the room.  They did not discuss the incident at any time after that, and she went back to school in January 2010.  When she inquired about a paid position approximately six months later, Liu asked her to go with him to Atlantic City for a weekend “to discuss job opportunities.”  Since she was afraid that Liu would harass or sexually assault her, she told him that she had other plans, and she stopped attempting to obtain employment with Phoenix.

Wang then filed a lawsuit alleging quid pro quo and hostile work environment sexual harassment, as well as retaliation and discriminatory failure to hire, under the NYCHRL and/or state law.  Phoenix moved to dismiss the action, arguing, among other things, that because Wang was an unpaid intern, she could not assert any claims under the NYCHRL or state law, except for her failure to hire claims.

The Court’s Decision and Reasoning

The court ultimately granted Phoenix’s motion in part, finding as “an issue of first impression” that Wang was not an “employee” under the NYCHRL because she was not paid.  In making this finding, the court relied upon case law decided under federal and state civil rights law barring claims by unpaid interns and volunteers.  It also rejected Wang’s claim that she should be considered an employee under a four-factor test – hire, power of dismissal, and supervision and control of tasks performed – that courts previously have utilized; instead, the court pointed out that the test advocated by Wang was used to determine whether a defendant is a plaintiff’s employer, not whether a plaintiff was a defendant’s employee.  Lastly, the court found that the NYCHRL’s legislative history indicated that unpaid interns were not covered by the NYCHRL.

As for Wang’s failure to hire claims, the court denied Phoenix’s motion, rejecting the company’s arguments that she had failed to allege both that a permanent position was available, and that she applied for the position in question.  Again relying upon cases interpreting federal and state civil rights statutes, the court found that the complaint “plausibly gives rise to an inference that there was an un-posted vacancy, and that Wang attempted to apply for the vacancy through informal procedures.”

Take-Aways

While employers may see the Wang decision as absolving them from liability for harassment of unpaid interns, the decision may serve as a catalyst for ultimately expanding statutory protections to interns.  On October 15, 2013, in response to Wang, New York state legislators introduced a bill designed to extend the protections of the state anti-discrimination law to interns.  The proposed legislation would make it illegal to discriminate against or harass interns on the basis of factors including gender, race, age, sexual orientation, disability, marital status , military status, and other factors.   If the legislation is enacted, New York would join Oregon in protecting unpaid interns from discrimination and harassment under state civil rights law.

Even in the absence of such legislation, employers need to be aware that harassment of interns may subject them and their employees to potential liability under other legal theories.  Moreover, no company is going to want to allow such conduct to occur from a recruitment or public relations perspective.

(Of course, whether an intern should be paid or unpaid is another story, and the subject for another blog article.)