914 F.3d 779
2d Cir.2019Background
- Patrick Velarde enrolled in a for-profit cosmetology academy in NY to obtain the 1,000 state-required hours needed to sit for the cosmetology licensing exam; the program combined classroom instruction and supervised practical work in the school's public salon.
- Velarde completed 8 weeks of classroom training and ~22 weeks (748 hours) of unpaid supervised salon work where he performed services for paying customers and occasional janitorial/clerical tasks; he paid tuition (~$12,823) and received only nominal tips.
- Velarde sued the Academy under the FLSA and NYLL seeking unpaid minimum wages and overtime for his salon work, alleging the Academy was his employer because it derived revenue from services students provided.
- The District Court granted judgment on the pleadings for the Academy; the magistrate recommended dismissal. Velarde appealed to the Second Circuit.
- The Second Circuit reviewed de novo whether student-trainees at a for-profit vocational school are "employees" under FLSA/NYLL and whether the Glatt primary-beneficiary test applies in this vocational training context.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Glatt primary-beneficiary test governs unpaid vocational trainees | Velarde: the court should focus on "economic reality" and whether the Academy received an immediate advantage; if so, students are employees | Academy: Glatt applies; must evaluate totality of circumstances to see who primarily benefited | Glatt test applies to vocational students; assess totality of circumstances and relative benefits |
| Whether Velarde was an "employee" under FLSA/NYLL while working in the salon | Velarde: Academy derived revenue from his work, so he was an employee entitled to wages | Academy: Velarde paid tuition for required practical training, received supervision and educational benefit, and did not displace paid staff | Velarde was the primary beneficiary of the relationship and not an employee under FLSA/NYLL |
| Relevance of the Academy's commercial benefit from student work | Velarde: any immediate commercial benefit shows employment | Academy: commercial benefit is only one factor; supervision, integrated coursework, and state-mandated hours show educational character | Commercial benefit alone is not dispositive; supervision and state-required training weigh for student status |
| Whether inadequacy of training or displacement of employees could change outcome | Velarde argued training was not optimally allocated and included menial tasks | Academy showed supervision, state-approved curriculum, and that students did not replace paid staff | If supervision were inadequate or work displaced employees and provided no educational value, outcome might differ; here supervision and educational value existed |
Key Cases Cited
- Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528 (2d Cir. 2015) (articulating the primary-beneficiary test for unpaid interns)
- Walling v. Portland Terminal Co., 330 U.S. 148 (U.S. 1947) (trainees who primarily benefit educationally are not employees under FLSA)
- Barfield v. N.Y.C. Health & Hosps. Corp., 537 F.3d 132 (2d Cir. 2008) (FLSA employment is a flexible, totality-of-the-circumstances inquiry)
- Xuedan Wang v. Hearst Corp., 877 F.3d 69 (2d Cir. 2017) (application of Glatt factors to interns; practical tasks can still yield educational benefit)
- Hollins v. Regency Corp., 867 F.3d 830 (7th Cir. 2017) (cosmetology students paying for practical training are not employees)
- Benjamin v. B & H Educ., Inc., 877 F.3d 1139 (9th Cir. 2017) (students not employees where clinical work enabled obtaining state licensing hours)
- Solis v. Laurelbrook Sanitarium & Sch., Inc., 642 F.3d 518 (6th Cir. 2011) (vocational students in state-approved programs were not employees where supervision and educational value existed)