Eleventh Circuit Adopts Second Circuit’s “Primary Beneficiary” Test to Determine Whether Students Are Employees Under Fair Labor Standards Act

In Schumann v. Collier Anesthesia, P.A., No. 14-13169, 2015 WL 5297260 (11th Cir. Sept. 11, 2015), the Eleventh Circuit adopted the Second Circuit’s “primary beneficiary” test to determine whether students and interns constitute “employees” for purposes of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (“FLSA”) (2012). Plaintiffs, 25 former student registered nurse anesthetists (“SRNAs”) sought to recover unpaid wages and overtime for the clinical hours they worked for Collier Anesthesia while attending a master’s degree program at defendant Wolford College, LLC. The District Court for the Middle District of Florida considered guidance from the Department of Labor’s (DOL) Field Operations Handbook and determined that the plaintiffs were not employees, and entered summary judgment for the defendants.

The Eleventh Circuit viewed the DOL’s six-factor test as a reduction of the facts of Walling v. Portland Terminal Co., 330 U.S. 148 (1947), the seminal case interpreting whether trainees are “employees” for purposes of the FLSA. In Portland Terminal, the Supreme Court held that the defendant railroad company’s trainees were not employees because they were not guaranteed a job upon completion of the training course, they did not displace regular employees, and their work did not expedite company business. Moreover, “the [FLSA] was not intended to penalize railroads for providing, free of charge . . . instruction at a place and in a manner which would most greatly benefit the trainees.” Id. at 149-50. Courts reviewing students and trainees since Portland Terminal have placed great emphasis on the Supreme Court’s language regarding whether the training program “most greatly benefited” the trainees.

The DOL Handbook enumerates six criteria, which, if met, preclude trainees or students from being classified as employees. Because the DOL Handbook is not a regulation or the result of rule-making, the court only granted Skidmore deference and found that it was not persuasive. Because the training at issue in Portland Terminal was not a universal requirement to obtain a degree or professional certification, the Eleventh Circuit did not consider the DOL guidelines to be an appropriate test in this case, which involved mandatory clinical hours required for students to obtain their degrees. The court stated that comparing the facts of this case to the facts of Portland Terminal would be “like trying to use a fork to eat soup.”

The court recognized the importance of internships and clinical experiences in preparing modern students for careers while highlighting the potential costs of supervising and teaching SRNAs. Therefore, the fact that the defendant anesthesiology practice might obtain benefits from offering internships was not dispositive. In determining how to discern the “primary beneficiary” in the intern-employer relationship, the court stated that the focus should be on the benefits to students while “considering whether the manner in which the employer implements the internship program takes unfair advantage of or is otherwise abusive towards the student.” To that end, the court adopted the Second Circuit’s seven-factor “primary beneficiary” balancing test from Glatt v. Fox Searchlight Pictures, Inc., 791 F.3d 376, 384 (2d Cir. 2015). While the Glatt factors involve similar considerations as the facts in Portland Terminal, the Eleventh Circuit found the balancing test to be a more flexible approach applicable to modern internship and clinical programs.

The court did not take a position on whether the SRNAs in this case were “employees,” and instead remanded the case for further proceedings consistent with its guidance regarding the Glatt factors.

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