Billy Schumann v. Collier Anesthesia, P.A.

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 14-13169
________________________
D.C. Docket No. 2:12-cv-00347-JES-CM
BILLY SCHUMANN,
DUSTIN ABRAHAM,
on behalf of themselves and
others similarly situated,
Plaintiffs-Appellants,
versus
COLLIER ANESTHESIA, P.A.,
a Florida corporation,
WOLFORD COLLEGE, LLC,
a Florida limited liability company,
THOMAS L. COOK,
an individual,
LYNDA M. WATERHOUSE,
an individual,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(September 11, 2015)
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Before MARTIN and ROSENBAUM, Circuit Judges, and PROCTOR, * District
Judge.
ROSENBAUM, Circuit Judge:
Upon receiving their master’s degrees, certifications, and licenses, Plaintiff-
Appellant student registered nurse anesthetists are legally able to put people to
sleep. We have heard, though never ourselves experienced, that some legal
opinions can do the same thing. We are hopeful that this one will not. 1
Plaintiffs in this case include twenty-five former student registered nurse
anesthetists (“SRNAs” or “Students”)2 who attended a master’s degree program at
Wolford College, LLC, with the goal of becoming certified registered nurse
anesthetists (“CRNAs”). 3 During the course of their study, the Students
participated in a clinical curriculum, which, under Florida law, was a prerequisite
to obtaining their master’s degrees.
Through this legal action, the Students sought to recover unpaid wages and
overtime under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (“FLSA”),
for their clinical hours. After considering the six factors that the Department of
Labor identified in guidance that, in turn, does no more than reduce the specific
*
The Honorable R. David Proctor, United States District Judge for the Northern District
of Alabama, sitting by designation.
1
But, then again, the writer is always the last to know.
2
SRNAs are registered nurses who have enrolled in an accredited college in pursuit of
their Master of Science degrees in the specialty of nurse anesthesia.
3
CRNAs are advanced-practice nurses who are licensed to administer anesthesia.
2
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facts of Walling v. Portland Terminal Co., 330 U.S. 148, 67 S. Ct. 639 (1947), to a
test, the district court determined that the SRNAs were not “employees” of
Defendants and entered summary judgment for Defendants.
But, with all due respect to the Department of Labor, it has no more
expertise in construing a Supreme Court case than does the Judiciary. Portland
Terminal is nearly seven decades old and, in our view, addresses a very different
factual situation involving a seven-or-eight-day, railroad-yard-brakeman training
program offered by a specific company for the purpose of creating a labor pool for
its own future use. This case, however, concerns a universal clinical-placement
requirement necessary to obtain a generally applicable advanced academic degree
and professional certification and licensure in the field.
So, while we follow Portland Terminal’s “primary beneficiary” test here, we
do not believe that measuring the facts in this case by a strict comparison to those
in Portland Terminal allows us to identify the primary beneficiary of a modern-day
internship for academic credit and professional certification. As a result, we now
adopt an application of Portland Terminal’s “primary beneficiary” test specifically
tailored to account for the unique qualities of the type of internship at issue in this
case. To allow the district court to apply this test in the first instance and, if the
district court desires, to give the parties an opportunity to further develop the
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record to address the components of the test, we remand this case for further
proceedings consistent with this opinion.
I.
A.
Florida tightly regulates the practice of nurse anesthesia to protect patients,
since anesthesia delivery can carry a high risk. Performing the duties of a CRNA
in Florida without a proper license or knowingly employing an unlicensed person
to engage in CRNA duties constitutes a felony. See Fla. Stat. § 464.016. To obtain
a CRNA license under Florida law, among other requirements, a person must
graduate from an accredited program and be certified by the National Commission
on Certification of Anesthesiologist Assistants. See Fla. Stat. §§ 458.3475,
459.023.
B.
Defendant Wolford College is a for-profit college that is wholly owned by
Defendant Lynda Waterhouse (Wolford College’s chief financial officer and
secretary-treasurer) and several anesthesiologists who also have an ownership
interest in Defendant Collier Anesthesia, P.A., a Florida corporation that provides
anesthesia services. In addition to her duties at Wolford College, Waterhouse
serves as the executive director of Collier Anesthesia. Defendant Dr. Thomas L.
Cook is the president and a part-owner of Collier.
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Wolford College offers one of 113 accredited CRNA programs in the
country, providing a 28-month curriculum that culminates in a Master of Science
degree in Nurse Anesthesia. While classroom learning dominates the first three
semesters of the master’s program, the last four semesters consist mainly of
clinical experience—a requirement that Florida law, the Council on Accreditation
for Nurse Anesthesia Educational Programs, 4 and the National Board of
Certification and Recertification of Nurse Anesthetists all mandate.
Under the Council on Accreditation’s standards, accredited schools must
require students to participate in a minimum of 550 clinical cases in a variety of
surgical procedures. This requirement is designed to ensure that when a student
graduates and becomes licensed, she will be able to safely and competently
monitor the status of her patients without another licensed professional in the
room. Among other tasks that must be mastered during the clinical phase of
training, SRNAs must learn to complete preoperative forms for patients; set up
anesthesia equipment; draw proper medications; monitor patients through the
induction, maintenance, and emergence phases of anesthesia; stock and re-stock
anesthesia carts; prepare rooms for use; clean equipment; and serve while “on
call.”
4
The Council on Accreditation oversees the accreditation of nurse anesthesia schools.
5
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In Wolford College’s clinical phase of education, each course has an
instructor and a syllabus, and the school requires daily evaluations that must be
completed by both the student and the CRNA or anesthesiologist who supervises
the student. Every day, the supervising CRNA or anesthesiologist must grade the
student in several areas, depending on the particular course. For example, in some
of the courses, the supervisor must evaluate the SRNA every day in nine different
categories, including anesthesia cart, anesthesia machine, airway set up, patient
assessment, record keeping, induction, maintenance, emergence, and interpersonal
behavior. In addition, on the same form, the supervising CRNA or physician
prepares brief comments regarding the day’s events. The clinical courses also
require end-of-semester self-evaluations prepared by the student and summative
semester evaluations completed by the clinical instructor or coordinator.
In order to sit for the Board examination, students must graduate from an
accredited nurse anesthesia program. For each class graduating in the years 2009
through 2013, between 96% and 100% of all Wolford graduates passed their Board
certifications.
C.
In this case, the Students obtained some, if not all, of their clinical education
at facilities where Collier Anesthesia practices anesthesiology. But the Students
viewed their clinical efforts as more than just education; they filed suit alleging
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that they served as “employees” of Defendants for purposes of the FLSA and that
Defendants unlawfully failed to compensate them with wages and overtime pay.
During the proceedings, Defendants moved for summary judgment, and the
Students filed a competing motion for partial summary judgment.
In support of their motion for summary judgment, Defendants submitted
evidence that all Students were notified at the start of their education that they
were not guaranteed employment with Collier upon graduation, and, in fact, none
of the Students involved in this case ever worked for Collier after they obtained
their master’s degrees. The Students also agreed at the beginning of their
educations (by signing Wolford’s Handbook) that although they would be
undertaking a clinical program, they would not become employed as nurse
anesthetists through their participation.
In addition, Defendants’ evidence showed that when the Students were at a
clinical location, they were identified as SRNAs, and they were required to wear
scrubs with the Wolford College logo. And, although while participating in the
clinical program, in some instances, the Students, without direct supervision from
an anesthesiologist or a CRNA, readied rooms, stocked carts, prepared
preoperative forms, and performed other functions, a licensed anesthesiologist or
CRNA was required to review the SRNAs’ work as part of the SRNAs’ daily
evaluations.
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For their part, the Students claimed that Collier benefited financially by
using their services as SRNAs in place of licensed CRNAs. Although Wolford’s
curriculum contemplated that SRNAs would work in the clinical program for 40
hours per week, the Students submitted evidence that Collier routinely scheduled
SRNAs in excess of 40 hours per week. They further presented testimony that they
were scheduled to perform work at Collier-staffed facilities 365 days per year,
including weekends, holidays, and the days in between semesters. And, although
Wolford and Collier represented to the Students that their shifts would be eight
hours long, the Students stated that they were required to arrive at facilities in
advance of their scheduled shifts. Consequently, the Students indicated, an eight-
hour shift actually required SRNAs to work for a minimum of 8.75 to 10 hours per
day.
In addition to their own statements, the Students relied upon the testimony of
Barbara Rose, a former Collier employee who the Students contend was
responsible for CRNA and SRNA scheduling. From April 2010 through April
2012, Rose prepared the SRNA monthly and daily schedules for assignments at
Collier’s clinical sites.
Collier usually scheduled SRNAs for five shifts per week. Rose indicated
that in preparing the daily schedule, she strived to use SRNAs to reduce the
number of Collier CRNAs needed for the schedule. According to Rose, Collier
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removed CRNAs from the daily schedule after the fact in favor of SRNAs and, in
Rose’s opinion, if the SRNAs had not been scheduled, Collier would have needed
CRNAs to cover shifts. The Students pointed to Rose’s testimony to support their
theory that SRNAs at Collier displaced CRNAs on the schedule and that Collier
affirmatively tried to use as few licensed nurses as possible. Based on this
evidence, the Students argued that the displacement of CRNAs allowed Collier to
save money in running its practice.
Rose, however, admitted that she lacked important first-hand knowledge
about Collier’s scheduling practices. In particular, Rose did not know about
Collier’s payrolls, the number of patient cases on which Collier worked, the
number of CRNAs on Collier’s payroll, the number of anesthesiologists on its
payroll, other personal knowledge necessary to support the Students’ claims of
displacement of regular workers, or the economic benefit to Collier from the
Students’ services.
To counteract Rose’s testimony, Defendants presented the testimony of Keri
Ortega, who served as the Assistant Program Director and Associate Director of
Graduate Education at Wolford College during the period in question. Ortega was
one of two Wolford employees who were primarily responsible for scheduling the
students in the clinical program. She attested that, typically, Rose sent her a
proposed monthly schedule. Ortega, Wolford Program Director Dr. Lauren
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Corder, or Wolford Dean Dr. John Nolan then reviewed the schedule. According
to Ortega, the schedule is a “living document”—it constantly changes for a number
of reasons, including, among others, cases are removed from and added to the
schedule, patients refuse to allow student participation, and cases are changed from
one procedure to another due to illness, equipment problems, and other last-minute
circumstances. So Ortega viewed the schedules that Rose prepared as merely
initial schedules which were subject to review and significant change.
Defense expert Dr. Daniel Janyja, an anesthesiologist at Collier, also
provided evidence that contradicted Rose’s testimony. He echoed Ortega, stating
that the scheduling of CRNAs and SRNAs in operating rooms is a highly complex
and fluid process that changes up to the last minute on a daily basis. According to
Dr. Janyja, Collier was capable of meeting its patient safety and legal obligations
with existing licensed personnel, without using the Students and without incurring
additional personnel costs. Dr. Janyja opined that Wolford students did not
displace CRNAs. To the contrary, Dr. Janyja viewed the Students as more of a
burden than a benefit to Collier because, among other reasons, the learning process
impedes the actual delivery of anesthesia.
Defendants also presented evidence supporting their contention that it is
sometimes difficult to place students in a clinical environment. Certain surgeons
and hospital locations refuse to allow students in the operating room. When a
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surgeon indicates a preference not to use students, Collier honors that preference,
and Wolford does not place any students in those situations. Patients also
sometimes decline student participation in their case.
And, from the perspective of a CRNA, allowing a student to participate in
the administration of anesthesia under that individual’s license creates an added
stress that would not otherwise be present. Moreover, student participation can
slow down the administration of anesthesia because the CRNA may need to take
time to respond to questions posed by a student. Or a student may attempt a
procedure, fail, and require the CRNA (or anesthesiologist) to complete the
procedure. And, as previously described, Wolford also requires the
anesthesiologist or CRNA supervising students to complete paperwork pertaining
to each student’s presence, including daily evaluations. This paperwork detracts
time from the CRNA or anesthesiologist’s day.
The Students responded to this evidence by pointing out that, under what is
known as the “Revised Teaching Rule,”5 Collier could receive reimbursement for
student activities. According to the Students, Collier was able to use one CRNA to
obtain 100% of the CRNA fee for two cases at the same time with one student
5
On January 1, 2010, the Department of Health and Human Services put into effect 42
C.F.R. § 414.61(a)(2)—the “CRNA Teaching Rule.” Under this new rule, Collier was permitted
to bill Medicare (using a “QZ” billing code) for one CRNA who supervises two students in
concurrent cases (one student in each of two operating rooms) at a reimbursement rate of 100%
to each of the two rooms.
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assigned to each case. And, following the rule change, Wolford and Collier
decided to institute a two-to-one SRNA-to-CRNA supervision ratio. The Students
argued that supervising SRNAs at a ratio of two to one made teaching “more
advantageous” because Collier was reimbursed for two students’ concurrent
participation where only one CRNA provided supervision.
Collier acknowledged that it used the CRNA Teaching Rule and billed
Medicare for some of its patients’ procedures using the Revised Teaching Rule.
According to Collier, however, during this time, the number of CRNAs on its
payroll and the amount of Collier’s payroll costs remained “substantially
unchanged” despite the fluctuations in the number of Wolford students that it used
in the clinical program from semester to semester. In addition, it asserted that at all
times that billing occurred under this new rule, Collier anesthesiologists continued
to supervise CRNAs and SRNAs without charge to Medicare. Collier’s Executive
Director, Waterhouse, also refuted the Students’ claim that Collier saved money by
using the Students in place of the CRNAs. According to Waterhouse, Collier did
not save on labor costs, but rather, it lost money as a result of using the SRNAs
because of the time spent training the Students. Besides these costs, Defendants
presented evidence to show that Collier paid a “clinical fee” of $1,500 per student
to Wolford to underwrite Wolford’s costs and to assist Wolford in remaining
eligible for federal student loan funding.
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After considering the facts presented by each party, the district court granted
summary judgment in favor of Defendants, finding that the Students were not
employees under the FLSA, so they were not entitled to a minimum wage or
overtime pay.
On appeal, the Students contend that, in rendering its decision, the district
court improperly declined to follow the six-factor test promulgated by the
Department of Labor’s Wage and Hour Division. The Students also assert that
genuine issues of material fact exist in the case, which preclude the entry of
summary judgment in favor of Defendants.
II.
Because a determination of an individual’s employment status under the
FLSA is a question of law, we review de novo the district court’s finding that no
employment relationship existed between the Students and Defendants. Scantland
v. Jeffry Knight, Inc., 721 F.3d 1308, 1310 (11th Cir. 2013).
We also review de novo an order granting summary judgment and apply the
same legal standards that control the district court. Id. at 1310. Under Rule 56(a),
Fed. R. Civ. P., summary judgment is proper where “the movant shows that there
is no genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” We view all evidence and draw all justifiable inferences in the
nonmoving party's favor. Scantland, 721 F.3d at 1310.
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III.
A.
Congress enacted the FLSA “to aid the unprotected, unorganized and lowest
paid of the nation’s working population; that is, those employees who lacked
sufficient bargaining power to secure for themselves a minimum subsistence
wage.” Brooklyn Sav. Bank v. O’Neill, 324 U.S. 697, 707 n.18, 65 S. Ct. 895, 902
n. 18 (1945). In addition, Congress sought “to lessen, so far as seemed then
practicable, the distribution in commerce of goods produced under subnormal labor
conditions.” Rutherford Food Corp. v. McComb, 331 U.S. 722, 727, 67 S. Ct.
1473, 1475 (1947).
The protections the FLSA affords, however, extend to “employees” only.
As a result, only individuals falling within the Act’s definition of “employee” are
entitled to minimum wages and overtime.
The tricky part arises in determining who falls within the FLSA’s definition.
As other courts have observed, 6 the FLSA’s definitions as they relate to who
qualifies as an “employee” are not precise. The statute defines an “employee” as
6
See, e.g., Glatt v. Fox Searchlight Pictures, Inc., 791 F.3d 376, 381 (2d Cir. 2015)
(“The FLSA unhelpfully defines ‘employee’ . . . .”); Marshall v. Regis Educ. Corp., 666 F.2d
1324, 1326 (10th Cir. 1981) (describing FLSA’s definitions of “employee” and “employ” as
“circular and all inclusive”) (quoting Marshall v. Regis Educ. Corp., 1980 WL 2201, at *2 (D.
Colo. May 29, 1980)); Solis v. Laurelbrook Sanitarium and Sch., Inc., 642 F.3d 518, 522 (6th
Cir. 2011) (describing the FLSA’s definitions of “employee,” “employer,” and “employ” as
“exceedingly broad and generally unhelpful”); Henthorn v. Dep’t of Navy, 29 F.3d 682, 684
(D.C. Cir. 1994) (describing the FLSA’s definitions of “employee,” “employer,” “employ,” and
other terms as “so unhelpful”).
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“any individual employed by an employer,” and an “employer,” in turn, includes
“any person acting directly or indirectly in the interest of an employer in relation to
an employee.” 29 U.S.C. §§ 203(d) and (e)(1). The Act also provides that the
term “employ” means “to suffer or permit to work.” Id. at § 203(g). Congress
intended for these broad definitions to be “‘comprehensive enough’ to include
‘working relationships, which prior to this Act, were not deemed to fall within an
employer-employee category.’” Scantland, 721 F.3d at 1311 (citing Rutherford
Food, 331 U.S. at 729, 67 S. Ct. at 1476 (quoting Portland Terminal, 330 U.S. at
150-51, 67 S. Ct. at 640)).
Nevertheless, the terms “employee” and “employer” “cannot be interpreted
so as to make a person whose work serves only his own interest an employee of
another person who gives him aid and instruction.” Portland Terminal, 330 U.S. at
152, 67 S. Ct. at 641. As the Supreme Court has cautioned, the FLSA was “not
intended to stamp all persons as employees who, without any express or implied
compensation agreement, might work for their own advantage on the promises of
another. Otherwise, all students would be employees of the school or college they
attended, and as such entitled to receive minimum wages.” Id.
B.
In Portland Terminal, the seminal case involving whether trainees are
“employees” for purposes of the FLSA, the defendant railroad company offered a
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practical-training course for prospective yard brakemen. Id. at 149, 67 S. Ct. at
640. While participants were not guaranteed a job upon completion of the course,
they were required to successfully finish the course to be eligible to serve as
brakemen for the railroad. Id. at 149-50, 67 S. Ct. at 640. On average, the course
lasted seven or eight days. Id. at 149, 67 S. Ct. at 640. During training, a yard
crew instructed and supervised the trainees, gradually allowing them to perform
actual work under close scrutiny. Id. The trainees’ work did not displace any
regular employees, who continued to do most of the work themselves. Id. at 150,
67 S. Ct. at 640. Nor did the trainees’ work expedite company business. Id. In
fact, at times, it impeded it. Id. In holding that the trainees were not “employees”
for purposes of the FLSA, the Supreme Court reasoned,
Had these trainees taken courses in railroading in a public
or private vocational school, wholly disassociated from
the railroad, it could not reasonably be suggested that
they were employees of the school within the meaning of
the Act. Nor could they, in that situation, have been
considered as employees of the railroad merely because
the school’s graduates would constitute a labor pool from
which the railroad could later draw its employees.
Id. at 152-53, 67 S. Ct. at 641. Ultimately, the Supreme Court explained, “The
Fair Labor Standards Act was not intended to penalize railroads for providing, free
of charge, the same kind of instruction at a place and in a manner which would
most greatly benefit the trainees.” Id. at 153, 67 S. Ct. at 641 (emphasis added).
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C.
The Department of Labor (“DOL”) refers without attribution to Portland
Terminal in its Field Operations Handbook’s guidance on identifying whether a
trainee or a student is an “employee” under the FLSA. Specifically, the Handbook
states, “The Supreme Court has held that the words ‘to suffer or permit to work, as
used in the FLSA to define ‘employ’, do not make all persons employees who,
without any express or implied compensation agreement, may work for their own
advantages on the premises of another,” See Wage & Hour Div., U.S. Dep’t of
Labor, Field Operations Handbook ch.10b11 (Oct. 20, 1993),
http://www.dol.gov/whd/FOH/FOH_Ch10.pdf (last visited Aug. 28, 2015). This
statement paraphrases Portland Terminal. See Portland Terminal, 330 U.S. at 152,
67 S. Ct. at 641 (“The definition ‘suffer or permit to work’ was obviously not
intended to stamp all persons as employees who, without any express or implied
compensation agreement, might work for their own advantage on the premises of
another.”).
After referring to the content of Portland Terminal, the Handbook then
opines that “[i]f all of the following criteria are met, the trainees or students are not
employees within the meaning of the FLSA:”
1. The training, even though it includes actual
operation of the facilities of the employer, is
similar to that which would be given in a
vocational school.
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2. The training is for the benefit of the trainees or
students.
3. The trainees or students do not displace regular
employees, but work under their close observation.
4. The employer that provides the training derives no
immediate advantage from the activities of the
trainees or students, and on occasion his/her
operations may actually be impeded.
5. The trainees or students are not necessarily entitled
to a job at the conclusion of the training period.
6. The employer and the trainees or students
understand that the trainees or students are not
entitled to wages for the time spent in training.
Id. (emphasis in original). The Students assert that we should defer to this
guidance, but we respectfully disagree.
Just as it is clear that the Handbook refers to Portland Terminal in its
introduction to the six factors it sets forth, it is equally plain from reviewing the six
factors that the Handbook derived them by simply reducing the facts of Portland
Terminal to a test. This test is not a regulation, and it did not arise as a result of
rule-making or an adversarial process. At most, it is entitled to Skidmore
deference, meaning that the deference it is due is “proportional to its ‘power to
persuade.’” See United States v. Mead Corp., 533 U.S. 218, 235, 121 S. Ct. 2164,
2175-76 (citing Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S. Ct. 161, 164
(1944)).
We do not defer to this test because, with all due respect to the DOL and the
important work that it does, we do not find it persuasive. First, “an agency has no
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special competence or role in interpreting a judicial decision.” Glatt v. Fox
Searchlight Pictures, Inc., 791 F3d 376, 383 (2d Cir. 2015) (citation omitted).
Second, as the Second Circuit has observed, the test “attempts to fit Portland
Terminal’s particular facts to all workplaces, and . . . is too rigid . . . .” Id. Third,
while some circuits have given some deference to the test, no circuit has adopted it
wholesale and has deferred to the test’s requirement that “all” factors be met for a
trainee not to qualify as an “employee” under the FLSA. In short, we prefer to
take our guidance on this issue directly from Portland Terminal and not from the
DOL’s interpretation of it.
D.
We therefore return to Portland Terminal. Since Portland Terminal, courts
reviewing cases involving students and trainees have focused on the Supreme
Court’s language describing the program at issue in that case as having “most
greatly benefit[ed]” the trainees. As a result, these courts have, for the most part,
concentrated on evaluating the “primary beneficiary” of the training or school
program to determine whether participants constituted “employees” under the
FLSA, 7 generally concluding that such an approach reveals the “economic reality”
7
See, e.g., Glatt, 791 F.3d at 383 (“[T]he proper question is whether the intern or the
employer is the primary beneficiary of the relationship.”); McLaughlin v. Ensley, 877 F.2d 1207,
1209 (4th Cir. 1989) (“[T]he proper legal inquiry in this case is whether [the employer] or the
[trainees] principally benefited from the weeklong [training] arrangement.”); Donovan v. Am.
Airlines, Inc., 686 F.2d 267, 271-72 (5th Cir. 1982) (analogizing the facts of the case to those at
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of the situation.8 In doing so, they have considered the entirety of the
circumstances, balancing a variety of factors 9 that often entail comparing the facts
of the case to the facts in Portland Terminal or to the six factors that the DOL sets
forth in its Handbook. As we have explained, both forms of comparison are
effectively the same.
E.
But most recently, in Glatt, 791 F.3d at 384, the Second Circuit has reflected
on the limitations of comparing the characteristics of the modern internship to the
specific facts at issue in Portland Terminal. As the Second Circuit observed,
issue in Portland Terminal and noting that Portland Terminal turned on the determination that
the training “most greatly benefit[ed] the trainees”); Solis, 642 F.3d at 529 (“To conclude, we
hold that the proper approach for determining whether an employment relationship exists in the
context of a training or learning situation is to ascertain which party derives the primary benefit
from the relationship.”); Blair v. Willis, 420 F.3d 823, 829 (8th Cir. 2005) (finding that students
were not “employees” because the chores that they were required to do were “primarily for the
students’, not the [school’s] benefit”); Marshall v. Regis Educ. Corp., 666 F.2d at 1326-27
(comparing respective benefits of the student resident assistants and the college where they
engaged in the program to determine whether the resident assistants were “employees” of the
college and noting that “[t]he mere fact that the College [employer] may have derived some
economic value from the [resident assistant] program does not override the educational benefits
of the program and is not dispositive of the ‘employee’ issue”).
8
One court that has applied the primary-beneficiary standard has opined, however, that
“stat[ing] that economic realities govern is no more helpful than attempting to determine
employment status by reference directly to the FLSA’s definitions themselves.” Solis, 642 F.3d
at 522-23.
9
See, e.g., Glatt, 791 F.3d at 384 (citing with approval Barfield v. N.Y.C. Health &
Hosps. Corp., 537 F.3d 132, 141-42 (2d Cir. 2008) for the proposition that “employment for
FLSA purposes is ‘a flexible concept to be determined on a case-by-case basis by review of the
totality of the circumstances’” and applying a “set of non-exhaustive factors” to determine
whether interns were “employees”); McLaughlin, 877 F.2d at 1210 (evaluating all of the “factual
circumstances”); Am. Airlines, 686 F.2d at 272 (endorsing “balancing analysis”); Solis, 642 F.3d
at 529-32 (considering all of the “[f]actors” and “evidence”); Blair, 420 F.3d at 829 (evaluating
the “totality of the economic circumstances”); Regis Educ. Corp., 666 F.2d at 1326 (considering
the “circumstances of the whole activity”).
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Portland Terminal is now 68 years old. Id. The facts of that case do not
necessarily “reflect[] the role of internships in today’s economy . . . .” See id.
(referring to the DOL’s Handbook guidance).
We add to these points the significant fact that the training involved in
Portland Terminal was not a universal requirement for a particular type of
educational degree or for professional certification or professional licensure in the
field. Instead, the Portland Terminal training was offered by a company for its
own, specific purposes, to create a ready labor pool for itself. So trying to evaluate
the program at issue here by comparing it to all of the facts from Portland
Terminal that were relevant and helpful to assessing the training program at issue
in that case, is like trying to use a fork to eat soup. Like the fork and the spoon, the
training at issue in Portland Terminal and in the case under review have
similarities and may be in the same general category (eating utensils and training
programs). But comparison to the facts from Portland Terminal alone can cover
the gamut of relevant considerations in a case like the one before us no better than
a fork can do a spoon’s job in ladling soup. 10
10
Our references here are to the traditional fork and spoon, not the “spork,” a utensil that
is a cross between a spoon and a fork, or as President Clinton once jokingly described it in
explaining at the 1995 Radio and Television Correspondents’ Dinner that his administration was
reinventing government’s approach to school lunches by “cut[ting] the cutlery,” “the symbol of
[his] administration.” https://www.youtube.com/watch?v=01tRdTvmKpo (last visited Aug. 27,
2015).
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Longer-term, intensive modern internships that are required to obtain
academic degrees and professional certification and licensure in a field are just too
different from the short training class offered by the railroad in Portland Terminal
for the purpose of creating its own labor pool. As exemplified by the facts of the
pending case, modern internships can play an important—indeed critical—role in
preparing students for their chosen careers. Imagine if a CRNA could report to
work on her first day and be allowed unsupervised to conduct the induction,
maintenance, and emergence phases of anesthesia administration, having only ever
read about or watched someone else perform them. The potential danger and
discomfort to the patient under such circumstances is self-evident and startling. So
we need anesthesiologists and CRNAs who are willing to teach SRNAs their trade
through internships.
Yet taking on the responsibility of supervising and teaching SRNAs is a
heavy one with serious potential costs. We cannot realistically expect
anesthesiology practices to expose themselves to these costs by providing students
with the opportunity to participate in 550 cases each, without receiving some type
of benefit from the arrangement. See Am. Airlines, 686 F.2d at 272 (“if attendance
were solely for the trainee’s benefit, the company would not conduct the [training]
except as a matter of altruism or public pro bono”).
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But the mere fact that an anesthesiology practice obtains benefits from
offering SRNAs internships cannot, standing alone, render the student interns
“employees” for purposes of the FLSA. See, e.g., Solis, 642 F.3d at 530-31
(though the school derived benefits from students’ work at its facilities, the value
of the benefits to the students from the work arrangement outweighed the benefits
to the school, so the students were not “employees”). Indeed, there is nothing
inherently wrong with an employer’s benefiting from an internship that also plainly
benefits the interns.
Nevertheless, we recognize the potential for some employers to maximize
their benefits at the unfair expense and abuse of student interns. And that is a
problem.
So our dilemma arises in determining how to discern the primary beneficiary
in a relationship where both the intern and the employer may obtain significant
benefits. We think that the best way to do this is to focus on the benefits to the
student while still considering whether the manner in which the employer
implements the internship program takes unfair advantage of or is otherwise
abusive towards the student. This orientation allows for student internships to
accomplish their important goals but still accounts for congressional concerns in
enacting the FLSA.
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We also believe that the Second Circuit’s articulation of “a non-exhaustive
set of considerations” for evaluation in determining the “primary beneficiary” in
cases involving modern internships goes far towards fulfilling this function. In
particular, the Second Circuit has identified the following factors:
1. The extent to which the intern and the employer
clearly understand that there is no expectation of
compensation. Any promise of compensation,
express or implied, suggests that the intern is an
employee—and vice versa.
2. The extent to which the internship provides
training that would be similar to that which would
be given in an educational environment, including
the clinical and other hands-on training provided
by educational institutions.
3. The extent to which the internship is tied to the
intern’s formal education program by integrated
coursework or the receipt of academic credit.
4. The extent to which the internship accommodates
the intern’s academic commitments by
corresponding to the academic calendar.
5. The extent to which the internship’s duration is
limited to the period in which the internship
provides the intern with beneficial learning.
6. The extent to which the intern’s work
complements, rather than displaces, the work of
paid employees while providing significant
educational benefits to the intern.
7. The extent to which the intern and the employer
understand that the internship is conducted without
entitlement to a paid job at the conclusion of the
internship.
Glatt, 791 F.3d at 384. Under the Second Circuit’s approach, “[n]o one factor is
dispositive and every factor need not point in the same direction for the court to
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conclude that the intern is not an employee . . . .” Id. Rather, courts must engage
in a “weighing and balancing [of] all of the circumstances,” including, where
appropriate, other considerations not expressed in the seven factors. Id. The
Second Circuit has described this approach as “flexible” and “faithful to Portland
Terminal,” reasoning that “[n]othing in the Supreme Court’s decision suggests that
any particular fact was essential to its conclusion or that the facts on which it relied
would have the same relevance in every workplace.” Id. at 384-85.
We agree with the Second Circuit’s reasoning and its interpretation of
Portland Terminal. The factors that the Second Circuit has identified effectively
tweak the Supreme Court’s considerations in evaluating the training program in
Portland Terminal to make them applicable to modern-day internships like the
type at issue here.
In many ways, the Glatt factors involve consideration of the same or similar
facts to those that the Supreme Court found important in Portland Terminal and
that the DOL Handbook guidance deemed relevant factors for consideration.
Indeed, factors 2, 3, and 5 are more detailed expressions of Portland Terminal’s
concern that the training be similar to that available in a vocational or other
educational environment. Likewise, factors 2 through 6 reflect Portland
Terminal’s attention to the benefit to the intern. In addition, factors 2 and 6 relate
directly to Portland Terminal’s consideration of whether the intern displaces
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regular employees and whether the intern works under the close supervision of
existing employees. Finally, factors 1 and 7 are essentially the same as Portland
Terminal’s considerations that the intern and employer both understand that the
intern will not receive wages and that the intern is not entitled to a job upon
completion of the internship, respectively.
Only Portland Terminal’s reference to the railroad’s receipt of “no
‘immediate advantage’ from any work done by the trainees” is not accounted for
by the Glatt factors. But the training in Portland Terminal was so different from a
modern internship for academic, certification, and licensure purposes that we do
not see how this particular consideration sheds light on the primary-beneficiary
analysis here. In Portland Terminal, despite not receiving an “immediate
advantage” from the training program, the railroad had a significant economic
incentive to offer the training because it needed a ready pool of qualified brakemen
from which it could hire. In the absence of the training, there may well not have
been any. If the railroad had also obtained a direct and immediate financial or
competitive advantage from providing a training program that it was going to have
to offer for its own business reasons regardless of whether it received a direct
advantage, that could have served as an indication that the railroad was taking
unfair advantage of the situation.
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But, as we have explained, the modern internship as a requirement for
academic credit and professional certification and licensure is very different. For
starters, the students seeking the internships—as opposed to a particular company’s
business requirements—drive the need for the internships to exist. Second,
licensure and certification laws provide evidence that we as a society have decided
that clinical internships are necessary and important. Third, we find it difficult to
conceive that anesthesiology practices would be willing to take on the risks, costs,
and detriments of teaching students in a clinical environment for extended periods
(four semesters, for example) without receiving some benefit for their troubles. As
we have further noted, though, the mere fact that an employer obtains a benefit
from providing a clinical internship does not mean that the employer is the
“primary beneficiary” of the relationship. Therefore, we cannot see how
consideration of whether the employer gains an “immediate advantage” from an
internship, in and of itself, brings us any closer to resolving who the primary
beneficiary of the relationship is.
Instead, we focus on the Glatt factors. In order to allow the district court to
apply these factors in the first instance and, if it desires, to permit the parties to
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supplement the record, we remand this case to the district court. But first we
provide some guidance on applying some of the factors.11
The fourth factor focuses on the extent to which the internship
accommodates the intern’s academic commitment by corresponding to the
academic calendar. In a case like this one, where the clinical training and the
academic commitment are one and the same, this consideration must account for
whether a legitimate reason exists for clinical training to occur on days when
school is out of session.
As for the fifth factor—the extent to which the internship’s duration is
limited to the period in which the internship provides the intern with beneficial
learning—this consideration must recognize the goals of the internship and
determine whether the duration of the internship is necessary to accomplish them.
In making this evaluation, the court should keep in mind that designing an
internship is not an exact science. We cannot expect that the length of the
internship will always match up perfectly with the skills to be taught and the
experience to be gained through the program. An internship that is longer than
absolutely necessary to accomplish the educational and experiential goals of the
program does not necessarily weigh in favor of a determination that the intern is an
11
Certain factors, such as the first one, for instance, are self-explanatory, so we do not
elaborate on them.
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“employee.” Instead, the court should consider whether the duration of the
internship is grossly excessive in comparison to the period of beneficial learning.
As part of this consideration, the court should also evaluate the extent to
which the nature of the training requires the daily schedule that the intern must
endure. In this case, graduation, certification, and licensure requirements all
demanded that students participate in at least 550 cases involving a variety of
procedures. Again, we imagine that it would be difficult, if not impossible, to plan
the scheduling of SRNAs for precisely 550 different procedures over four
semesters, particularly in view of the constantly changing nature of the medical
schedule. Nor do we think that the law requires such precision. We also note that
the SRNAs’ clinical work was required to extend for four semesters, even if the
Students finished 550 cases in a shorter period. As a result, it does not seem to us
that the four-semester duration of the program would have been excessive, no
matter how many cases the students completed during that time. But if the reason
that the SRNAs completed well in excess of 550 cases during their four clinical
semesters was because they were made to work grossly excessive hours, that
would be an indication that the employer may have unfairly taken advantage of or
otherwise abused the SRNAs and that they should be regarded as “employees”
under the FLSA.
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The sixth factor evaluates the extent to which the intern’s work
complements, rather than displaces, the work of paid employees while providing
significant educational benefits to the intern. This case involves a unique
consideration on this factor. The Students assert that CRNAs each worked fewer
hours than they otherwise would have, in the absence of the SRNAs, meaning that
the SRNAs displaced CRNA hours. For support, they point to the Revised
Teaching Rule, which allowed Collier to be reimbursed by Medicare for providing
anesthesia in two rooms while having to pay only a single CRNA—something that
Collier could not have done if the SRNAs were not there.
We do not opine on whether, in fact, CRNAs worked fewer hours as a result
of the SRNAs’ presence, under the Revised Teaching Rule. But if they did, we do
not think that such a fact, in and of itself, would resolve which party this factor
favors. The analysis under this factor must also account for the existence of a
Medicare rule that contemplates the use of two SRNAs to assist one CRNA in two
rooms simultaneously. A Medicare rule obviously cannot inform whether a SRNA
is an “employee” under the FLSA. Nevertheless, the rule’s existence and
endorsement of the staffing of two patient rooms with one CRNA and two SRNAs
suggests that, at least from an anesthesia-administration point of view, there was
nothing unsafe or wrong with Collier’s scheduling of two SRNAs to be overseen
by a single CRNA. Under these circumstances, therefore, it would not be
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appropriate to consider Collier’s use of the Rule as evidence that Collier unfairly
took advantage of the SRNAs when it scheduled two SRNAs to be supervised by a
single CRNA. Of course, to the extent that CRNA hours may have been displaced
by SRNA hours for reasons other than the Revised Teaching Rule, the court should
evaluate those circumstances on their own merit.
In applying the factors to ascertain the primary beneficiary of an internship
relationship, we caution that the proper resolution of a case may not necessarily be
an all-or-nothing determination. That is, we can envision a scenario where a
portion of the student’s efforts constitute a bona fide internship that primarily
benefits the student, but the employer also takes unfair advantage of the student’s
need to complete the internship by making continuation of the internship implicitly
or explicitly contingent on the student’s performance of tasks or his working of
hours well beyond the bounds of what could fairly be expected to be a part of the
internship.12 For example, in the context of an internship required for an academic
degree and professional licensure and certification in a medical field, consider an
employer who requires an intern to paint the employer’s house in order for the
student to complete an internship of which the student was otherwise the primary
beneficiary. Under those circumstances, the student would not constitute an
12
By explaining this point, we do not mean to suggest that a split decision would or
would not be appropriate in this particular case. In the interests of thoroughness, though, we
simply note this point.
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“employee” for work performed within the legitimate confines of the internship but
could qualify as an “employee” for all hours expended in painting the house, a task
so far beyond the pale of the contemplated internship that it clearly did not serve to
further the goals of the internship.
Finally, we do not take a position at this time regarding whether the Students
in this case were “employees” for purposes of the FLSA.
IV.
With these factors in mind, we vacate the district court’s entry of summary
judgment for Defendants and remand for further proceedings consistent with this
opinion.
VACATED AND REMANDED.
32