Billy Schumann v. Collier Anesthesia, P.A.
803 F.3d 1199, 2015 U.S. App. LEXIS 16194, 25 Wage & Hour Cas.2d (BNA) 537 (2015)
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Rule of Law:
The determination of whether a student or trainee in a modern, academically required clinical internship is an 'employee' under the Fair Labor Standards Act (FLSA) depends on a flexible 'primary beneficiary' test that evaluates a non-exhaustive set of factors focused on who primarily benefits from the relationship, balancing the student's educational gain against potential employer exploitation.
Facts:
- Billy Schumann and Dustin Abraham were among 25 student registered nurse anesthetists (SRNAs) pursuing a Master of Science degree at Wolford College, LLC, with the goal of becoming certified registered nurse anesthetists (CRNAs).
- Florida law, as well as accreditation and certification bodies, required these SRNAs to complete a clinical curriculum, including a minimum of 550 patient cases, as a prerequisite for their master's degrees and professional licensure.
- Wolford College, a for-profit institution, and Collier Anesthesia, P.A., a company providing anesthesia services, had overlapping ownership, with Lynda Waterhouse serving as CFO of Wolford and executive director of Collier, and Dr. Thomas L. Cook as president and part-owner of Collier.
- The SRNAs received some or all of their clinical education at facilities where Collier Anesthesia practiced, under the supervision of CRNAs or anesthesiologists.
- Before starting their program, the SRNAs were notified and signed Wolford’s Handbook agreeing that they would not be paid for their clinical hours nor guaranteed employment with Collier Anesthesia after graduation.
- While on clinical rotations, SRNAs wore Wolford College-branded scrubs, were identified as students, and their work was subject to daily evaluation and review by supervising licensed professionals.
- Students presented evidence claiming they were frequently scheduled for clinical work exceeding 40 hours per week, including weekends and holidays, and that actual daily shifts often extended beyond the scheduled 8 hours.
- Students contended that Collier Anesthesia financially benefited from their services by displacing paid CRNA hours, especially after a Medicare 'Revised Teaching Rule' allowed Collier to bill for two concurrent cases with one supervising CRNA and two SRNAs, while Defendants asserted SRNAs were a burden and Collier paid a clinical fee to Wolford.
Procedural Posture:
- Billy Schumann and Dustin Abraham, on behalf of themselves and others similarly situated (Plaintiffs-Appellants), filed a lawsuit in the United States District Court for the Middle District of Florida against Collier Anesthesia, P.A., Wolford College, LLC, Thomas L. Cook, and Lynda M. Waterhouse (Defendants-Appellees), alleging violations of the Fair Labor Standards Act (FLSA) for unpaid wages and overtime.
- Both the Defendants and the Plaintiffs filed competing motions for summary judgment.
- The district court granted summary judgment in favor of the Defendants, ruling that the student registered nurse anesthetists were not 'employees' under the FLSA and thus were not entitled to minimum wage or overtime pay.
- The Plaintiffs appealed the district court's decision to the United States Court of Appeals for the Eleventh Circuit.
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Issue:
Are student registered nurse anesthetists (SRNAs) who participate in a mandatory clinical curriculum for academic credit and professional certification considered 'employees' under the Fair Labor Standards Act (FLSA) for purposes of receiving minimum wage and overtime pay?
Opinions:
Majority - Rosenbaum, Circuit Judge
No, not necessarily. The district court erred in applying the Department of Labor's rigid six-factor test derived from Walling v. Portland Terminal Co. to determine if student registered nurse anesthetists (SRNAs) are 'employees' under the FLSA; instead, a more flexible 'primary beneficiary' test, specifically the Second Circuit's non-exhaustive seven-factor approach, should be applied to modern internships required for academic degrees and professional certification. The court began by reviewing Walling v. Portland Terminal Co., the seminal Supreme Court case on trainee employment, which centered on whether the training 'most greatly benefited' the trainees. It expressly rejected the Department of Labor’s six-factor test for identifying 'employees' from its Field Operations Handbook, finding it unpersuasive. The court reasoned that the DOL lacks special competence to interpret Supreme Court decisions, the test is too rigid, and it merely reduced the specific facts of Portland Terminal to a test that is ill-suited for modern internships. Portland Terminal involved short-term training by a company for its own labor pool, unlike the universal clinical requirement for an advanced academic degree and professional licensure at issue here. The court then adopted the Second Circuit’s 'primary beneficiary' test from Glatt v. Fox Searchlight Pictures, Inc., which provides a non-exhaustive set of seven factors specifically tailored for modern internships. This test focuses on the benefits to the student, while also considering whether the employer's implementation of the internship takes unfair advantage of or is abusive towards the student. The court provided guidance on applying certain factors: for instance, the fourth factor (correspondence to the academic calendar) must account for legitimate reasons clinical training might occur outside school sessions. For the fifth factor (duration limited to beneficial learning), the court emphasized considering whether the duration is 'grossly excessive' rather than merely longer than absolutely necessary. Regarding the sixth factor (complementing vs. displacing paid employees), the court noted that the existence of Medicare's Revised Teaching Rule, which contemplates two SRNAs assisting one CRNA, should be considered and that using the rule does not automatically imply unfair advantage or displacement, though other reasons for displacement should be evaluated. The court also clarified that a student might be an 'employee' for tasks entirely unrelated to the internship's educational goals, even if the core internship does not create an employment relationship. The case was vacated and remanded to allow the district court to apply this new test.
Analysis:
This case significantly refines the legal standard for determining whether interns are 'employees' under the FLSA, particularly for modern clinical programs required for academic degrees and professional licensure. By rejecting the Department of Labor’s rigid six-factor test in favor of the Second Circuit's flexible, multi-factor 'primary beneficiary' test, the Eleventh Circuit has provided a more nuanced framework better suited to the complexities of contemporary internships. This ruling provides greater clarity for educational institutions and businesses offering internships, emphasizing the educational benefits to the student while still guarding against potential exploitation. Future cases will likely scrutinize how employers structure their internships, ensuring that the primary purpose remains student learning and that any benefits to the employer are incidental or demonstrably balanced by substantial educational value, impacting the design and supervision of professional training programs across various sectors.
