Academic journal article Journal of Corporation Law

Compensation Isn't Everything: The Threshold-Remuneration Test for Employment Discrimination under Title VII

Academic journal article Journal of Corporation Law

Compensation Isn't Everything: The Threshold-Remuneration Test for Employment Discrimination under Title VII

Article excerpt

I. Introduction II. Background      A. Title VII      B. The Circuit Split on Remuneration         1. The Threshold-Remuneration Cohort         2. Remuneration as a Nondispositive Factor         3. The Fifth Circuit Decision III. Analysis      A. Title VII's Language Regarding Employment      B. Protecting the Livelihood of Employees      C. The Employment of Unpaid Interns Under the Fair Labor          Standard Act      D. The Current State of the Test: Wang v. Phoenix Satellite          Television US, Inc. IV. Recommendation      A. This Test Preserves Title VII's Original Goal of Protecting          Employees' Livelihood in the New Realities of Employment      B. This Test Prevents Non-Employee Volunteers From Gaining          Rights Under Title VII      C. This Test Provides Concrete and Predictable Guidance to          Employers VI. Conclusion.. 


The employment rights of unpaid interns have recently become a hot topic in both the public and private sectors. (1) With the growing importance of work experience for college students and new graduates, internships have become a vital component to the development of a successful career or even to landing an entry-level job. Although internships have become a standard portion of a young adult's resume, those interns who do not receive compensation for their efforts do not enjoy the basic protections of federal antidiscrimination laws in the majority of circuits. Most circuits have adopted a threshold-remuneration test, which allows a plaintiff to proceed with claims of employment discrimination only if she is receiving significant remuneration for her work. Title VII of the Civil Rights Act entitles only employees to protections from employment discrimination, and within the framework of the threshold-remuneration test, an employment relationship cannot exist without significant compensation flowing from one party to the other.

This Note argues that unpaid interns and volunteer workers who are entitled to compensation under the Fair Labor Standards Act (FLSA) should also receive protections from employment discrimination under Title VII of the Civil Rights Act of 1964, regardless of whether the intern is actually receiving that compensation. Part II provides an overview of an employee's rights to be free from discrimination under federal law and control tests for employment. Additionally, Part II introduces the circuit split cases on the issue of a threshold-remuneration test. Part III analyzes the applicability of the threshold-remuneration test to the realities of today's employment landscape. Part III also provides an analysis of the FLSA's opposing view on what constitutes an employment relationship between an intern and an organization. Part IV recommends that courts expand the threshold-remuneration test to include a second prong, which would require courts to examine whether the FLSA entitles the unpaid worker to wages, and if so, consider that entitlement as actual remuneration.


This Part explains the purpose of Title VII and some of its sections as they are relevant to this Note. These sections include the crucial statutory definitions of harassment, employers, and employees. Next, this Part discusses the threshold-remuneration test and the emergence of a circuit split on its utility in determining whether a plaintiff is an employee for purposes of Title VII. This Part provides background on the development of this circuit split and the factors that each of the two opposing sides has found to be most important. Finally, it discusses the Fifth Circuit's most recent decision regarding remuneration as a threshold to employment under Title VII.

A. Title VII

Title VII of the Civil Rights Act of 1964 prohibits employers from engaging in unlawful employment practices based on race, color, religion, sex, and national origin. (2) These unlawful employment practices include failing or refusing to hire or discharge an individual or discriminating in compensation or terms and conditions of employment based on a protected class. …

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