Last week, a federal district court in Indiana found that an unpaid cosmetology student working in a for-profit training program was not an employee under the Fair Labor Standards Act (FLSA). Hollins v. Regency Corp. (N.D. Ill. 2015). In granting summary judgment for the Regency Beauty Institute, the court found that the cosmetology student was not entitled to wages for her work during the 14-month, for-profit program.
The student, Venitia Hollins, argued that her performance of various cosmetology services for paying customers transformed her into an employee, which entitled her to wages under the FLSA. In coming to its decision, the court employed a balancing test that weighed the benefit for both the Institute and the student. The court focused on the fact that the for-fee services were a major part of the student’s training program, but found that the for-profit work was primarily performed for the benefit of the student to prepare her to pass the exam to become a licensed cosmetologist. Although the Institute made some profits off the performance of her services, that alone did not alter Ms. Hollins’ status as a student.
This is a good reminder to members that they should be mindful when choosing to classify individuals as unpaid students and interns. The U.S. Department of Labor (DOL) sets out a six-factor test for determining whether an individual participating in a private sector, for-profit internship or training program is entitled to compensation. One of the major factors in that test is the primary-beneficiary test employed by the court in the aforementioned cosmetology case. A fact sheet is available on the DOL’s website that lists the factors for the test and some of the considerations when applying it.