Ninth Circuit Says Cosmetology Students Are Not Employees of School

By © Duane Morris January 10, 2018
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Ninth Circuit Says Cosmetology Students Are Not Employees of School

On Dec. 18, 2017, the 9th U.S. Circuit Court of Appeals held in Benjamin v. B&H Education, Inc., F.3d, No. 15-17147, that cosmetology students were not employees of their schools. In doing so, the 9th Circuit joined the 2nd and 11th Circuits in adopting the primary beneficiary test to determine whether students are employees. The Benjamin case was the first to reach a decision from the 9th Circuit, which joined many other jurisdictions that had previously dismissed virtually identical cases (including a recent affirmance of summary judgment by the 7th U.S. Circuit Court of Appeals).

The Benjamin plaintiffs were former students who alleged that under federal, California and Nevada law, they should have been paid wages as employees for the time they spent practicing skills in the schools' clinic classroom and performing concierge duties (e.g., cleaning, sanitizing, greeting clients, recommending hair products, etc.).

U.S. District Judge Vince Chhabria for the Northern District of California granted summary judgment for the school, holding that the plaintiffs "were not employees under federal or state law because plaintiffs were the primary beneficiaries of the educational program and they had not shown that [the cosmetology school] subordinated the educational function of its clinics to its own profit-making purposes." [Note: Duane Morris represented B&H Education in this case in the Northern District of California.]

The 9th Circuit affirmed. With regard to the federal claims, the Benjamin court concluded that "the primary beneficiary test best captures the Supreme Court's economic realities test in the student/employee context." In doing so, the court rejected the Department of Labor's intern test as being "too rigid" and not in accord with case law. The 9th Circuit then looked to nonexhaustive factors to conclude that the students were not employees. Such factors included that:

  • No students had expected to be paid.
  • Students "received hands-on training in the clinic and academic credit for the hours they worked."
  • The "clinical work corresponded to [the students'] academic commitments."
  • The students did not participate in the clinic program longer than was required by state law.
  • Students "did not routinely displace the work of paid employees."
  • Students "had no expectation of employment [with the schools] upon graduation."

In short, all of the factors confirmed that the plaintiffs were the primary beneficiaries of the time they spent completing their course curriculum and were thus never employees of the school.

With regard to the state law claims, the 9th Circuit confirmed that Nevada follows federal law, so plaintiffs' claims failed for the same reasons their federal claims failed. The court also refused to apply California's joint-employer "control" test to the student-school context because "schools typically exercise significant control over their students, but that does not make them employers." Thus, the 9th Circuit reasoned that the California Supreme Court would rather apply a test that is "similar to the FLSA primary beneficiary test." Under that test, the plaintiffs were not employees of their school.

Conclusion

The 9th Circuit's opinion has important lessons for schools with students who learn in a clinic by providing services to paying members of the public. Specifically, schools should take care to inform students that they are not employees and will not be paid a wage. All tasks in the clinic should be tied to an educational goal with documentation and curriculum to support the claim.

Republished with permission. © Duane Morris. All rights reserved. 

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