Following recent precedent by the Second and Eleventh Circuits, the U.S. District Court for the Northern District of California dismissed the claims of cosmetology and haircutting students who claimed they acted primarily as workers rather than students.
In Benjamin v. B&H Education, Inc., the plaintiffs sought to represent a putative class of students seeking wages from their schools under the federal Fair Labor Standards Act ("FLSA") and the wage hour laws of California and Nevada.
The District Court held that the putative class representatives had not established that the educational benefits they received from attending the defendant’s schools were outweighed by the unpaid work they performed.
Primary or Secondary Status?
The District Court expressly agreed with the Second and Eleventh Circuit’s interpretations of the United States Supreme Court’s decision in Walling v. Portland Terminal Co.
The Court held that, when assessing whether the students were employees when they did their clinical work, it would examine “all the circumstances” to determine whether the relationship chiefly benefits the student or the entity for which the student is working.
In the context of a for-profit school's clinical education program, “this means a court should inquire whether a school's efforts to make money from the clinic relegated the educational function of the clinic to a secondary status.”
Standard Applicable under the FLSA and California & Nevada Law
The District Court applied this standard to the plaintiffs’ claims under the FLSA and the wage-and-hour laws of California and Nevada.
In regard to California law, the District Court noted that in distinguishing between "employees" and "independent contractors," the California Supreme Court has stated that "[i]n no sense is [California law's] definition of the term 'employ' based on federal law." Furthermore, the District Court stated that California law tends to focus on a putative employer's right to control its putative employee.
However, the District Court stated that it “makes no sense to” extend this principle to the educational context because schools typically exercise significant control over their students without their becoming “employers” of the students.
“Small Doses” on Non-educational Work
The plaintiffs were required to do some non-educational work such as cleaning and answering telephones. However, the District Court stated that because professionals could expect to do similar work, the tasks were relevant in preparing for the plaintiffs' chosen professions and “in small doses” would not relegate the educational function of the clinics to secondary status.
Furthermore, the plaintiffs failed to provide specific evidence that they did not receive meaningful clinical instruction.
Finally, the mere fact that the clinics charged customers for services was not independently sufficient to support a finding that the “business functions” of the position had been elevated above the educational purposes of the work.
Employers who allow unpaid student trainees to work at their facilities should examine their programs to ensure that the educational benefits to the student are not subordinate to the benefits of the work received by the employer.