Jacqueline Benjamin v. B & H Education
877 F.3d 1139 (2017)
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Rule of Law:
When determining whether vocational students are employees under the Fair Labor Standards Act (FLSA), courts should apply the 'primary beneficiary test,' which considers the totality of the circumstances to decide whether the student or the institution is the principal beneficiary of the relationship.
Facts:
- Jacqueline Benjamin, Taiwo Koyejo, and Bryan Gonzalez were students at Marinello Schools of Beauty, a for-profit cosmetology school operated by B&H Education, Inc.
- The school offered discounted cosmetology services to the public, which were performed by students in a clinical setting.
- Students were required to complete hundreds of hours of such practical training on customers to earn academic credit and qualify to take state licensing exams in California and Nevada.
- As part of their clinical work, students performed cosmetology services and ancillary tasks such as sanitizing stations, laundering linens, greeting customers, and selling products.
- The students paid tuition to Marinello but received no wages for the work they performed in the school's clinics.
- Students alleged they were often left unsupervised and required to perform services they already knew how to do, rather than learning new skills for their exams.
- Marinello required students to purchase the school's supplies to service customers and imposed fines for tardiness or absences during clinic shifts.
Procedural Posture:
- Plaintiffs Jacqueline Benjamin and other students filed a Second Amended Collective and Class Action Complaint against B&H Education, Inc. in the U.S. District Court for the Northern District of California (trial court).
- Plaintiffs moved for summary judgment, asserting they were employees.
- Defendant B&H filed a cross-motion for summary judgment, asserting Plaintiffs were students.
- The District Court granted B&H's motion to strike three witness declarations submitted by the Plaintiffs for failure to comply with discovery rules.
- The District Court denied Plaintiffs' motion for summary judgment and granted B&H's motion for summary judgment, holding that the students were not employees.
- Plaintiffs (appellants) appealed the District Court's judgment to the U.S. Court of Appeals for the Ninth Circuit, challenging both the summary judgment ruling and the discovery sanction.
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Issue:
Do vocational students who perform clinical services on paying customers as a required part of their training qualify as 'employees' entitled to wages under the Fair Labor Standards Act?
Opinions:
Majority - Schroeder, Circuit Judge
No. Vocational students are not 'employees' under the Fair Labor Standards Act when they are the primary beneficiaries of the clinical training relationship. This court adopts the 'primary beneficiary test' from sister circuits, rejecting the Department of Labor's more rigid six-factor test. The primary beneficiary test is a flexible, totality-of-the-circumstances analysis that better reflects the 'economic reality' of the student-school relationship as directed by the Supreme Court in cases like Walling v. Portland Terminal Co. Applying the test's non-exhaustive factors, the court found the students were the primary beneficiaries. They understood they would not be compensated, the hands-on training was integral to their formal education and necessary for state licensing, the program's duration was tied to educational requirements, students did not displace paid employees, and there was no expectation of a job upon completion. Because the relationship's central purpose was providing students with the required training to become licensed cosmetologists, they were not employees entitled to wages under the FLSA or analogous state laws.
Analysis:
This decision formally aligns the Ninth Circuit with the Second, Sixth, and Eleventh Circuits in adopting the flexible 'primary beneficiary test' for classifying students and interns under the FLSA. By rejecting the Department of Labor's rigid, all-or-nothing six-factor test, the court solidifies a modern, holistic standard that focuses on the educational nature of the relationship. This precedent makes it significantly more difficult for students in vocational training programs to succeed on wage claims, as long as the school can demonstrate that the hands-on work is an integral part of a bona fide educational curriculum. The ruling provides greater legal certainty for vocational schools and unpaid internship programs whose business models rely on student labor as a component of training.
