Manhattan Enacts Statute Authorizing Certain Unpaid Interns To Sue For Employment Discrimination Or Workplace Harassment

Effective June 14, 2014, certain unpaid interns in Manhattan gained the right to sue their employers for discrimination in employment or workplace harassment. However, the effect of this new statute is quite limited, because most unpaid trainees in Manhattan fall outside the new statute’s definition of an ” ‘intern.’ ” As a result, despite the new statute, most unpaid interns in the City continue to lack a right to sue.

On April 15, 2014, the New York City Mayor Bill de Blasio signed, into law, Local Law 9 of 2014 (“Local Law 9″ or the “new Law”). On March 26, 2014, the New York City Council had passed Local Law 9 by a unanimous vote of 50 to 0.

Local Law 9′s legislative history reflects that the New York City Council meant for Local Law 9 to overrule the October 3, 2013 decision of the U.S. District Court for the Southern District of Manhattan (Castel, J.) in Wang v. Phoenix Satellite Television US, Inc., No. 13-cv-00218, 2013 WL 5502803 (S.D.N.Y. Oct. 3, 2013).

In the Wang decision, the Southern District of Manhattan had held that, because “remuneration is a threshold issue in establishing the existence of an employment relationship,” “unpaid interns are not employees within the ambit of” the New York City Human Rights Law (the “NYCHRL”), N.Y. City Admin. Code § 8-107(a)(1). Wang, No. 13-cv-00218, slip op. at 12, 14. Consequently, the Wang Court had determined, an unpaid intern may not maintain a claim against an employer under the NYCHRL for firing the unpaid intern, or for discriminating against the intern in compensation or in the terms and conditions of employment, because of the intern’s (actual or perceived) protected characteristic, such as age, race, creed, color, or national origin.

As a result, in Wang, the Southern District of Manhattan had dismissed, for failure to state a claim, the NYCHRL hostile work environment sexual harassment claim brought by the plaintiff female, a 22-year-old, unpaid, graduate intern, against the defendant corporation based on the defendant’s bureau chief’s unwelcome, forceful sexual advances upon the plaintiff.

In response to the Wang opinion, and effective June 14, 2014, Local Law 9 amends the NYCHRL to provide that the NYCHRL’s provisions relating to employees — including N.Y. City Admin. Code § 8-107(a)(1), which confers, on employees, a cause of action against employers for discrimination in employment, including workplace harassment — shall apply to “interns,” without regard to whether the employer pays them a salary or wage. Local Law 9 of 2014, §§ 1, 2 (2014) (codified at N.Y. City Admin. Code §§ 8-102(28), 8-107(23)). However, the new Law defines the term ” ‘intern’ ” so narrowly as to exclude most workers whom employers improperly categorize as unpaid trainees.

As my July 31, 2013 blog post and my April 14, 2010 blog post explained, most “interns” or “traineees,” regardless of what the employer calls them, are employees within the meaning of the federal Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (the “FLSA”). Likewise, most interns or trainees in Manhattan are employees within the meaning of the New York Labor Law (the “NYLL”). As a result, in most cases, the FLSA requires that an employer in Manhattan pay its interns or trainees at least the federal minimum wage of $7.25 per hour, and the NYLL requires that an employer in the Empire State pay its interns or trainees at least the State minimum wage of $8.00 per hour.

Specifically, under the regulations and Wage and Hour letter rulings of the U.S. Department of Labor (the “U.S. DOL”), interns or trainees are not employees within the meaning of the FLSA, and thus need not be compensated by an employer, if all of six criteria apply. The first three of the U.S. DOL’s six criteria (for whether an employer must pay its interns the minimum wage and overtime compensation) are:

1. The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in an educational environment;
2. The training is for the benefit of the intern;
3. The intern does not displaces regular employees, but works under close supervision of existing staff.

Local Law 9′s definition of the term ” ‘intern’ ” closely tracks the U.S. DOL’s first three criteria for whether an employer must pay its trainees. Specifically, Local Law 9 states that the term ” ‘ intern’ ” means an individual who performs work for an employer on a temporary basis whose work:

1. Provides training or supplements training given in an educational environment such that the “employability” of the individual performing the work may be enhanced;
2. Provides experience for the benefit of the individual performing the work; and
3. Is performed under the close supervision of existing staff.

Local Law 9 of 2014, § 1 (codified at N.Y. City Admin. Code § 8-102(28)). As a result, the only interns or trainees whom the new law authorizes to sue their employers for employment discrimination or for workplace harassment are those few workers in Manhattan, NYC whose employers (i) properly categorize them, under the FLSA, as unpaid interns and (ii) lawfully decline to pay them the federal minimum wage or overtime compensation.

In contrast, Local Law 9 does not empower most of the numerous workers inManhattan whose employers improperly classify them as unpaid trainees and whose employer unlawfully fail to pay them the federal minimum wage or overtime pay to maintain lawsuits, either for employment discrimination or for harassment because of those workers’ protected characteristics, against their employers.

In fact, even if Local Law 9 had been in effect in mid-2013, the new law would not have authorized the two unpaid production interns in the U.S. District Court for the Southern District of Manhattan’s heavily publicized decision in Glatt v. Searchlight Pictures Inc., No. 11 Civ. 6784, 2013 WL 2495140 (S.D.N.Y. June 11, 2013) (Pauley, J.) — the decision analyzed in my July 31, 2013 blog post — to sue the defendant movie studios for employment discrimination or workplace harassment.

This is the case, among other reasons, because, in the Glatt case, the work which the plaintiff production interns performed for the defendant movie studios did not “provide[] training or supplement training given in an educational environment such that the employability of [the production interns] performing the work m[ight] be enhanced.” Local Law 9 of 2014, § 1; Glatt, No. 11 Civ. 6784, slip op. at 26 (“The benefits [the two production interns] may have received—such as knowledge of how a production or accounting office functions or references for future jobs—are the results of simply having worked as any other employee works, not of internships designed to be uniquely educational to the interns and of little utility to the employer. They received nothing approximating the education they would receive in an academic setting or vocational school.”).

In sum, because Local Law 9 does not enable most of the numerous workers in Manhattan whose employers improperly categorize them, under the FLSA, as unpaid interns to maintain lawsuits, either for discrimination in employment or for workplace harassment, against their employers, Local Law 9 makes little change to existing law.

If your company needs assistance or guidance on a labor or employment law issue and your company is located in the Manhattan, the borough Of Manhattan area, call Attorney David S. Rich at (347) 835-5688.