Eleventh Circuit Applies Fox Searchlight's Primary Beneficiary Test to Student Nursing Interns and Remands | Practical Law

Eleventh Circuit Applies Fox Searchlight's Primary Beneficiary Test to Student Nursing Interns and Remands | Practical Law

In Schumann v. Collier Anesthesia, P.A., the US Court of Appeals for the Eleventh Circuit held that determining whether a student intern performing work to obtain professional certification is an employee under the Fair Labor Standards Act (FLSA) depends on whether the employer or the intern primarily benefits from the working arrangement. The court applied the primary beneficiary test as recently articulated by the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc.

Eleventh Circuit Applies Fox Searchlight's Primary Beneficiary Test to Student Nursing Interns and Remands

by Practical Law Labor & Employment
Published on 21 Sep 2015 • USA (National/Federal)
In Schumann v. Collier Anesthesia, P.A., the US Court of Appeals for the Eleventh Circuit held that determining whether a student intern performing work to obtain professional certification is an employee under the Fair Labor Standards Act (FLSA) depends on whether the employer or the intern primarily benefits from the working arrangement. The court applied the primary beneficiary test as recently articulated by the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc.
On September 11, 2015, in Schumann v. Collier Anesthesia, P.A., the US Court of Appeals for the Eleventh Circuit held that the test for determining whether a student intern performing work to obtain an academic degree or professional certification in a specific field is an employee entitled to minimum wage and overtime pay under the FLSA depends on whether the employer or the intern primarily benefits from the working arrangement. The court applied the primary beneficiary test as recently articulated by the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc., finding that key considerations in applying the test involve the benefits obtained by the student and whether the employer implements the internship program to take unfair advantage of the student intern. The court rejected the DOL's six-factor test in favor of the non-exhaustive set of factors identified in Glatt. (No. 14-13169, (11th Cir. Sept. 11, 2015).)

Background

Wolford College, an accredited school in Florida with an ownership interest in anesthesia provider, Collier Anesthesia, P.A., had a master's degree program for students to become certified registered nurse anesthetists (CRNAs). As part of Wolford's master's program, the student registered nurse anesthetists (SRNAs) were required by Florida law and nursing anesthesia accreditation boards to participate in a clinical curriculum. The SRNAs obtained much of their clinical education at facilities where Collier provided anesthesia services. The SRNAs were not paid for their clinical time. At the start of the clinical education, SRNAs were informed they were not guaranteed employment with Collier on graduation.
Over two dozen SRNAs sued Collier and Wolford, alleging that they were employees under the FLSA and were due back wages and overtime pay. The SRNAs argued that:
  • Without SRNAs, Collier would have scheduled more CRNAs.
  • SRNAs often performed their work without supervision.
  • Collier was reimbursed for SRNAs' activities and Wolford and Collier changed their policy to increase the SRNA to CRNA ratio from 1:1 to 2:1 so that Collier could obtain greater reimbursement for the SRNAs' activities.
Collier and Wolford moved for summary judgment based on evidence that:
  • Wolford conducted daily evaluations of the SRNA's progress as well as evaluations on a semester basis reflecting the educational nature of the SRNA program.
  • CRNAs supervising the SRNA took on the added stress of supervising and preparing additional paperwork due to the SRNA's presence.
  • The SRNA's schedule was fluid, not static, and could change for various reasons up to the last minute, including if the patient did not want SRNAs to participate in a procedure.
The district court granted summary judgment in favor of Collier and Wolford, finding that the SRNAs were not employees. The SRNAs appealed to the Eleventh Circuit, arguing that:
  • The district court improperly declined to follow the six-factor test promulgated by the DOL to determine whether a trainee or student is an employee.
  • Genuine issues of material fact remained in the case precluding summary judgment.

Outcome

The Eleventh Circuit vacated the district court's grant of summary judgment to Collier and Wolford and remanded. The court held that:
  • The test for determining whether a student intern who must obtain academic degrees and professional certification in a specific field is an employee under the FLSA depends on whether the employer or the intern primarily benefits from the working arrangement.
  • Applying the primary beneficiary test requires evaluating a non-exhaustive set of factors as recently identified by the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc. ( 791 F.3d 376, 381 (2d Cir. 2015)).
The Eleventh Circuit found that:
  • FLSA protections extend only to employees but the FLSA's definition of "employee" is broad and not precise (29 U.S.C. § 203(d)).
  • The DOL's six-factor test on which the SRNAs were relying was not persuasive because:
    • the test attempted to fit a nearly 70-year-old US Supreme Court decision's particular, antiquated facts into the modern workplace (Walling v. Portland Terminal Co., 330 U.S. 148 (1947));
    • an agency does not have special competence in interpreting a judicial decision; and
    • no circuit has completely adopted the DOL's test or required that all six factors be met to find that a trainee or student was not an FLSA employee.
    (Glatt, 791 F.3d at 383.)
  • Portland Terminal's primary beneficiary test can still offer guidance on whether student interns in a training program are employees, but applying Portland Terminal's facts from nearly 70 years ago to the modern internship is not useful.
  • Wolford's internship program plays a critical role in preparing SRNAs for their chosen career and requires CRNAs willing to supervise and teach the SRNAs. It is unrealistic to expect Wolford and Collier to incur the significant costs of the internship program without some type of benefit. There is nothing inherently wrong with Wolford and Collier benefiting from an internship that also plainly benefits the interns.
  • The best way to determine whether the employer or the student intern is the primary beneficiary of the working relationship is to:
    • focus on the benefits to the student; and
    • consider if the employer implements the internship program in a manner that takes advantage or abuses the student intern.
  • The Second Circuit's flexible approach in Glatt for determining the primary beneficiary is useful and involves examining a non-exhaustive set of factors similar to those in Portland Terminal, including the extent to which:
    • the intern and the employer clearly understand that there is no expectation of compensation (any express or implied promise of compensation favors an employment relationship);
    • the internship provides training that would be similar to that given in an educational setting;
    • the internship is tied to the intern's formal education program by integrated coursework or by receiving academic credit;
    • the internship accommodates the intern's academic commitments by corresponding to the academic calendar;
    • the internship duration is limited to the period in which the internship provides the intern with beneficial learning;
    • the intern's work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern; and
    • the intern and the employer understand that the internship is conducted without entitlement to a paid job after the internship.
    (Glatt, 791 F.3d at 384.)
The Eleventh Circuit remanded to the district court to apply the Glatt factors. The court refrained from considering whether the SRNAs were employees but provided the district court with guidance on how to apply each of the factors to the SRNAs' internship with Wolford and Collier.

Practical Implications

As in Glatt, the Eleventh Circuit's decision in Schumann rejects the DOL's six-factor test in favor of a more flexible inquiry that focuses on whether the intern or the employer is the primary beneficiary of the relationship. However, employers should be aware of possible conflicts between the Eleventh Circuit's approach and the requirements of state law. It may be that an individual qualifies as an intern under federal or state law, but not both. Employers in all jurisdictions should regularly review their internship programs for compliance with the FLSA and state wage and hour requirements.