Students Sue Trade School Under FLSA

​The 6th U.S. Circuit Court of Appeals ruled that students at a cosmetology school could pursue a minimum wage claim under the Fair Labor Standards Act (FLSA) for janitorial tasks they performed, despite the overall educational benefits of the school's training program. But the appeals court sent the case back to the district court, instructing it to apply a test the 6th Circuit outlined for deciding if the students were employees—a standard that emphasized who benefited from menial tasks performed.

Douglas J operates licensed cosmetology schools in Michigan. At each school, Douglas J has classrooms that are used for instruction and operates a clinic salon with numerous styling stations and a complete skin and nail spa. To maintain its license, the school must follow a state-mandated curriculum and provide 1,500 hours of cosmetology education, which must include at least 425 hours of classroom instruction on theory and at least 965 hours of practical experience.

The salons are open to the public, and customers pay for beauty services provided by students. The salons also have a retail floor where apparel, tools, merchandise, skin and hair care products, makeup, and other products are available for sale. Only students perform cosmetology services for customers in the salons under the supervision of licensed instructors. The students are graded for their work based on their technical execution of the service and the customer experience.

Douglas J makes a profit from student tuition, required equipment purchased by students, beauty products sold to customers in salons and sales from salon services to the public. Yet students sign an enrollment agreement that does not provide them any compensation for any of their time spent in salons or for any other portion of their relationship with Douglas J. The students do not expect to be paid or to work for Douglas J upon completion of the training.

Students are scheduled to work in the salons during set times, during which they may not always have a customer. During such times, students could be asked to work on techniques using mannequins, assist fellow students and work on group projects. Students also could be asked to do laundry, restock shelves, clean service stations, clean and replace coffee mugs, sweep and dust the studio, clean glass surfaces, clean the break room microwave, empty the trash, and clean classroom boards, tables and floors. The students could not leave until every station in the studio, including break rooms, were entirely clean. A student who refuses to perform cleaning tasks could be sent home for the day and required to make up hours another day.

Three former students sued Douglas J and affiliated entities and operators under the FLSA, claiming that the defendants owed the students compensation for work performed during their time in school. The students estimated that they performed hundreds of hours on janitorial and cleaning tasks over the course of their training. They claimed that these tasks were not required by the state or included in Douglas J's curriculum and that they were not instructed in the tasks or graded for them by teachers at the school. These hours did, however, count toward their degrees and toward state training hours requirements.

The plaintiffs sought collective action status, but the parties agreed to first litigate the issue of liability.

The plaintiffs and defendants filed cross motions for summary judgment regarding whether students should receive compensation as employees for janitorial and cleaning activities.

The district court granted summary judgment to the plaintiffs, finding that they should receive pay because the tasks were too far removed from any educational benefit to be uncompensated. The district court certified the case as a collective action.

On appeal, the 6th Circuit determined that the district court used the wrong standard for deciding whether the students qualified as employees. The appeals court determined that the appropriate test is which party, the students or the school, primarily benefited from the menial tasks performed. Thus, the benefits to the students, such as educational credit, should have been compared to the benefit to the school, such as the free work performed, to determine whether the students acted as employees.

A dissenting judge disagreed with this test and argued that the entirety of the educational program should be considered to determine who primarily benefits from the relationship. However, the 6th Circuit sent the case back to the district court for reconsideration according to its test.

Eberline v. Douglas J. Holdings Inc., 6th Cir., No. 19-1781 (Dec. 17, 2020).

Professional Pointer: Trade schools can require students to perform free work but should avoid or minimize the menial tasks performed in favor of assignments with more educational value. Otherwise, they may owe students compensation for such tasks.

Jeffrey Rhodes is an attorney with McInroy, Rigby & Rhodes LLP in Arlington, Va.