Nesbitt v. FCNH, Inc.
Opinion
Plaintiff-Appellant Rhonda Nesbitt is a former massage therapy student who attended a for-profit vocational school operated by Defendants-Appellees ("Steiner"). Ms. Nesbitt, on behalf of a class of former students, brought suit claiming the students qualified as employees of Steiner under the Fair Labor Standards Act (FLSA),
*645 Background
Steiner operated for-profit vocational schools in multiple states. 1 Aplt. App. 6-7; 2 Aplt. App. 129. Steiner schools' curriculum included classroom and clinical education required for one to become licensed as a massage therapist. 2 Aplt. App. 130-31. The clinical component included approximately 100, fifty-minute massages, which counted toward the minimum clinical hours necessary for students to acquire their state licenses.
Rhonda Nesbitt brought her class-action suit under the FLSA in the District of Colorado on April 7, 2014.
2
1 Aplt. App. 1. Steiner moved to compel arbitration of the claims and to prohibit litigation of the issues as a class.
On remand, the district court addressed the issue of whether Ms. Nesbitt and the
*646
students she seeks to represent qualified as employees under the FLSA. The district court found they did not.
Nesbitt
,
Discussion
We review a district court's grant of summary judgment de novo.
Birch v. PolarisIndus., Inc.
,
The FLSA requires that - subject to certain exceptions - every employer pay its employees a specified minimum wage and time-and-a-half for hours worked over forty in a workweek.
See
Under
Reich
, a court assesses: (1) whether the training received is similar to that which would be given in a vocational school; (2) whether the training is for
*647
the benefit of the trainee or the employer; (3) whether the trainees displace regular employees, or rather work under close observation or supervision; (4) whether the employer that provides the training derives an immediate advantage from the activities of the trainees; (5) whether the trainees are necessarily entitled to a job at the completion of their training period; and (6) whether the employer and trainees understand that the trainees are not entitled to wages for the time they spend in training.
See
The district court applied
Reich
and it determined that Ms. Nesbitt and the other students were not employees.
See
Nesbitt
,
At the district court, it does not appear that Ms. Nesbitt contended that Regis Educational Corp. constitutes a stand-alone test distinct from Reich . See generally 4 Aplt. App. 336-55. Regardless, Regis Educational Corp. is merely another application of the totality of the circumstances test first articulated in Portland Terminal and later relied upon in Reich to examine the economic reality of the relationship between the entity providing training and the plaintiffs.
Ms. Nesbitt next invites us to apply the "primary beneficiary" test set forth by the Second Circuit in
Glatt v. Fox Searchlight Pictures, Inc.
,
I have found that at least four and arguably more of the six Reich factors suggest that plaintiffs were not defendants' employees. But at bottom I look at the "totality of the circumstances" and of the "entirety of the economic realities" of the parties' relationship. Put another way, I look at the forest, not just the trees.
Nesbitt
,
*648
United States v. Meyers
,
Finally, Ms. Nesbitt argues that even if Reich is the correct test, the district court erred in its application of the Reich factors and its assessment of the totality of the circumstances. She primarily focuses on two factors from the Reich test: the adequacy of the observation and supervision provided by Steiner over the students, and the profit Steiner allegedly received from having students perform massages without pay.
First, Ms. Nesbitt and Steiner disagree about the level of supervision and observation required under
Reich
. Ms. Nesbitt argues that merely having an instructor on premises during the clinics is not sufficient to satisfy
Reich
's "close observation" factor. Aplt. Br. at 56-61. In particular, she alleges that the students were unable to leave their posts to seek guidance from clinical instructors and that the instructors on premises never
actually
observed students during their massages - making the supervisors' physical presence illusory.
Second, Ms. Nesbitt argues that Steiner - not the students - was the primary beneficiary of their arrangement. According to Ms. Nesbitt, Steiner was able to profit from an unpaid workforce while the students were left with almost no beneficial training.
See
Aplt. Br. at 56-58, 61-62. However, the hours students spent performing massages as part of their Steiner curriculum allowed them to advance toward their minimum licensing requirements and provided them an obvious benefit. For example, in order to receive her Colorado license, Ms. Nesbitt was required to graduate from an accredited massage therapy school with a combined 500 hours of classroom and clinical training, and Steiner's 100-hour minimum clinical requirement clearly provided her a material benefit.
See
*649
The other factors also weigh in favor of finding that the students were trainees, not employees. First, we agree with the district court that the training received by the students was similar to training in vocational school because their training was "literally 'vocational school' training."
For the foregoing reasons, the district court did not err when it found that Ms. Nesbitt and the students she seeks to represent are not employees of Steiner under the FLSA.
AFFIRMED. The motion of the National Employment Lawyers Association et al. for leave to file a brief as amici curiae is GRANTED.
This is one of many factual issues about which the parties disagree. While Steiner alleges the supervisors were available to answer questions from students and observe students' work, Ms. Nesbitt contends the opposite. Ms. Nesbitt alleges that the students were told they were never to leave their stations (thus precluding them from seeking guidance), and that the supervisors did not observe the students' work because the students were required to keep their privacy curtains drawn throughout the massages (thus precluding any observation). See Aplt. Br. at 21-22, 24-26. Ultimately, it is unnecessary to resolve these factual disputes about the efficacy of Steiner's supervision and observation. As we discuss below, the other factors we consider and the nature of this arrangement compel a conclusion that Ms. Nesbitt and the class she seeks to represent were not employees, they were students on the path to a career.
In addition to her FLSA claim, Ms. Nesbitt brought a number of state-law claims not at issue on appeal. The district court dismissed the state-law claims, concluding that this court's decision on Ms. Nesbitt's FLSA claim would be dispositive. 9 Aplt. App. 834-35.
On January 5, 2018, the Department of Labor announced that it was abandoning its six-factor test in favor of the more flexible "primary beneficiary" test.
See
News Release, U.S. Dep't of Labor, U.S. Department of Labor Clarifies When Interns Working at For-Profit Employers Are Subject to the Fair Labor Standards Act (Jan. 5, 2018), https://www.dol.gov/newsroom/releases/whd/whd20180105;
see also
U.S. Dep't of Labor,
Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act
(Jan. 2018), https://www.dol.gov/whd/regs/compliance/whdfs71.pdf. As we have said before, however, we consider the DOL's interpretation of the FLSA embodied in its nonregulatory guidelines merely for its persuasive authority under
Skidmore v. Swift & Co.
,
To date, four circuits have adopted the primary beneficiary test.
See
Benjamin v. B&HEduc., Inc.
,
See
Robert J. Tepper & Matthew P. Holt,
Unpaid Internships: Free Labor or Valuable Learning Experience?
,
Steiner, for its part, asserts it made no profit from the operation of the massage therapy program given its overhead and other operational costs. See Aplee. Br. at 27-28; see also 2 Aplt. App. 133.
Reference
- Full Case Name
- Rhonda NESBITT, Individually, and on Behalf of All Others Similarly Situated, Plaintiff - Appellant, v. FCNH, INC.; Virginia Massage Therapy, Inc.; Mid-Atlantic Massage Therapy, Inc.; Steiner Education Group, Inc.; Steiner Leisure Ltd.; Seg Cort LLC, D/B/A Steiner Education Group, Defendants - Appellees, and National Employment Lawyers Association and Economics/Business Professors (William H. Kaempfer, Nadelle Grossman, Paula Cole, and Miriam Cherry), Amici Curiae.
- Cited By
- 3 cases
- Status
- Published