217 F. Supp. 3d 1288
D. Colo.2016Background
- Plaintiffs are students at Steiner Education Group (SEG) massage-therapy vocational schools who performed roughly 100 clinical 50-minute massages on paying customers as part of their curriculum.
- Enrollment agreements, catalogs, and handbooks disclosed clinics were required for graduation and that students (unlicensed) would not be paid; some states prohibit payment to unlicensed practitioners.
- Clinics were open to the public on advertised discounted rates; SEG generated revenue from clinic services, though profitability was disputed.
- SEG provided orientation, a campus clinic manager and teaching assistants (licensed therapists) available on premises; plaintiffs dispute the degree of direct, individualized supervision.
- Plaintiffs sued under the FLSA and various state wage laws claiming they were employees during clinical training; court granted summary judgment in part and considered whether plaintiffs were “employees” under the FLSA using the Tenth Circuit’s six-factor test.
- Court dismissed the FLSA claim as a matter of law, denied summary judgment on state-law claims for insufficient briefing, and sua sponte ordered briefing on whether to dismiss remaining state claims for lack of federal jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether students performing clinical massages were "employees" under the FLSA | Students contend the clinics functioned as unpaid labor that displaced paid workers and lacked meaningful supervision, making them employees entitled to wages | SEG argues students were trainees in vocational clinical programs: training resembled vocational school, benefitted students, did not displace regular employees, supervision met state requirements, no job guarantee, and parties understood no wages were due | Court held plaintiffs were not employees under the FLSA applying the Reich six‑factor totality test; granted summary judgment for defendants on the FLSA claim |
| Whether lack of direct supervision creates a triable issue on employee status | Plaintiffs say supervision was minimal and not individualized, supporting employee status | SEG points to accreditation and state licensing that required supervising staff and the presence/availability of licensed supervisors | Court found supervision (as required by accreditation/state law and manifested by clinic managers/assistants) weighed against employment; disputed nuances were not material |
| Whether SEG derived an immediate advantage (profit) from clinics | Plaintiffs argue SEG profited from public clinic revenue, supporting employee status | SEG contends clinics were educational and not profit-generating (profitability disputed); even if profitable, that factor alone is insufficient | Court found profit/disadvantage disputed but even a profit would not, alone, convert students to employees under the totality of the circumstances |
| Effect of FLSA dismissal on remaining state-law claims and jurisdiction | Plaintiffs did not address in detail; seek to proceed on state claims | SEG argued state-law tests would similarly fail but did not fully brief each state law | Court denied summary judgment on state-law claims for inadequate briefing and ordered parties to show cause why the Court should not dismiss the remaining state claims for lack of subject-matter jurisdiction |
Key Cases Cited
- Reich v. Parker Fire Protection Dist., 992 F.2d 1023 (10th Cir.) (adopts six-factor totality-of-the-circumstances test for trainee/employee status under the FLSA)
- Walling v. Portland Terminal Co., 330 U.S. 148 (Supreme Court) (training comparable to vocational school supports non-employee status)
- Anderson v. Liberty Lobby, 477 U.S. 242 (Supreme Court) (summary judgment standards and genuine dispute analysis)
- Celotex Corp. v. Catrett, 477 U.S. 317 (Supreme Court) (party moving for summary judgment must show absence of evidence for nonmoving party)
- Jochim v. Jean Madeline Educ. Ctr. of Cosmetology, Inc., 98 F. Supp. 3d 750 (E.D. Pa.) (vocational-student clinic services do not necessarily create employer-employee relationship)
- Nesbitt v. FCNH, Inc., 811 F.3d 371 (10th Cir.) (discussion concerning arbitration ruling rendered moot but relevant to jurisdictional background)