In many academic settings, students have the opportunity to work in a controlled and supervised environment in order to learn necessary skills, particularly in fields which require licensing by the state. These student trainees generally are not paid. A recent federal appellate court case addressed the question of whether they are employees and therefore, entitled to be paid. Both schools and students should be aware of the legal standards that apply to this situation to avoid potential problems.

The recent case was heard by the U.S. Court of Appeals for the Second Circuit and involved a for-profit cosmetology school. The plaintiff was a student who was required to complete unpaid work in the school’s salon 35 hours per week for 22 weeks. He argued he was an employee and should have been paid because the school benefitted from his work. Not only did he pay tuition, but the salon charged for his services (and were in fact charging a lower price since he was an unlicensed student, which made them more competitive with other salons). In addition, he argued he was required to do menial and janitorial tasks in addition to substantive cosmetology work and had no choice as to which tasks he had to complete, just like a typical employee.

In deciding whether student trainees are employees under labor laws, the U.S. Court of Appeals for the Second Circuit applied the same test that is used to determine whether interns are employees. That test focuses on who is the primary beneficiary of the student/intern’s work.

In finding that the student was the primary beneficiary and therefore not an employee, the Court looked at several factors. First, the student had to work exactly the number of hours required by the state to obtain a cosmetology license, no more or less. Next, the student’s work did not displace employees. Although the school did receive some benefit, the student was still the primary beneficiary and his labor complemented the services of paid employees.

In addition, the Court examined the expectations of the parties. The student was attending a for-profit school, he was paying tuition, and he was aware that this unpaid training would be required by the school. The Court noted the fact that he had to do some menial tasks didn’t mean there was no beneficial learning or that he was not the primary beneficiary of the training.

Although this particular student trainee program was not problematic, other school programs may be. In light of this decision, schools and students should seek guidance from an attorney if their trainee programs contain certain red flags such as requiring students to work unexpectedly long hours without pay or working hours that are beyond that which is required by state licensing laws. In addition, it is important to ensure the student trainee’s work is not replacing the labor of the school’s paid employees.

If you are concerned about your trainee program, contact us for a consultation.