908 F.3d 643
10th Cir.2018Background
- Nesbitt and a class of former massage-therapy students sued Steiner (for-profit vocational schools) under the FLSA, alleging students were employees and not paid minimum wage for clinical work.
- Steiner’s program combined classroom and a clinical component requiring ~100 fifty-minute massages on paying public clients; clinics occurred on school premises under purported instructor/TA supervision.
- Students completed clinic rotations (typically ~5 clients/day) to satisfy state licensing hour requirements; enrollment agreements stated training was unpaid and schools did not promise employment.
- District court granted summary judgment for Steiner, applying the six-factor Reich trainee test and finding students were not employees.
- Tenth Circuit affirmed, reviewing de novo the employee/trainee determination and applying the Reich totality-of-circumstances framework.
Issues
| Issue | Plaintiff's Argument (Nesbitt) | Defendant's Argument (Steiner) | Held |
|---|---|---|---|
| Whether students are "employees" under the FLSA | Students performed productive work for Steiner and should be paid minimum wage | Students were trainees receiving vocational clinical training necessary for licensure | Students are trainees, not employees; FLSA does not apply as employer–employee relationship |
| Proper legal test for trainee/intern status | Court should apply Regis or the Second Circuit "primary-beneficiary" approach (Glatt) focusing on educational context | Reich’s six-factor/totality test governs in this circuit | Reich six-factor totality test governs; Reich remains controlling precedent |
| Adequacy of supervision/observation (Reich factor) | Supervision was nominal/illusory; students could not seek help and were not observed | Supervisors/licensed therapists and TAs were present and met clinical supervision requirements | Presence of supervision satisfied this Reich factor when considered with other factors; did not show students functioned as regular employees |
| Who primarily benefited / whether Steiner derived immediate advantage | Steiner profited from unpaid student labor; school was primary beneficiary | Students obtained licensing hours and vocational benefit; any school revenue did not change trainee character | Students primarily benefited (obtained licensure hours); any alleged profit by Steiner did not outweigh trainee status |
Key Cases Cited
- Reich v. Parker Fire Prot. Dist., 992 F.2d 1023 (10th Cir. 1993) (adopts six-factor trainee test and totality-of-circumstances inquiry)
- Walling v. Portland Terminal Co., 330 U.S. 148 (1947) (distinguishes trainees from employees under the FLSA)
- Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528 (2d Cir. 2015) (articulates the primary-beneficiary test for interns)
- Marshall v. Regis Educ. Corp., 666 F.2d 1324 (10th Cir. 1981) (applies totality analysis to student workers in an educational context)
- Skidmore v. Swift & Co., 323 U.S. 134 (1944) (agency guidance afforded persuasive weight under Skidmore)