Patrick Velarde, on behalf of himself and all others similarly situated, Plaintiff-Appellant,
v.
GW GJ, Inc. d/b/a The Salon Professional Academy of Buffalo, Margaret Grenauer, and Paul Grenauer, Defendants-Appellees.
Argued: March 8, 2018
Plaintiff-appellant
Patrick Velarde sued The Salon Professional Academy of
Buffalo and its owners, Margaret Grenauer and Paul Grenauer,
(collectively, "the Academy") in the United States
District Court for the Western District of New York (Skretny,
J.) for alleged violations of the Fair Labor
Standards Act, 29 U.S.C. §§ 201 et seq.
("FLSA"), and Articles 6 and 19 of the New York
labor law, N.Y. Lab. Law §§ 190, 650 et
seq. Velarde alleges that, as a part of his vocational
training at the Academy for becoming a licensed beautician,
he was required to perform cosmetology services without
compensation in the Academy's student salon. He argues
that the requirement violated FLSA and New York labor law.
The District Court granted judgment on the pleadings to the
Academy, reasoning under the test that we established in
Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d
528, 536-537 (2d Cir. 2015), that Velarde was the
"primary beneficiary" of his relationship with the
Academy and therefore not an "employee" of the
Academy for the purposes of both FLSA and New York labor law.
On de novo review, we agree with the District Court's
analysis and AFFIRM its award of judgment to the Academy.
Robert
Wisniewski, Esq., New York, NY, for Plaintiff- Appellant.
James
W. Grable, Jr. (Terrence M. Connors on the brief), Connors
LLP, Buffalo, NY, for Defendants-Appellants.
Before: Cabranes and Carney, Circuit Judges, and Caproni,
District Judge. [*]
Susan
L. Carney, Circuit Judge
In
Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d
528 (2d Cir. 2015), we addressed the application of certain
federal and state employment laws to activities performed in
a commercial setting by temporary "interns." We
applied a "primary beneficiary" test: if, under
certain enumerated circumstances, the intern is the
"primary beneficiary" of the relationship, then the
host entity is not the intern's employer and has no legal
obligation to pay compensation under those laws; if, on the
other hand, the host entity is the "primary
beneficiary" of the relationship, then the entity is an
employer and federal and state employment laws-in particular,
the Fair Labor Standards Employment Act, 29 U.S.C.
§§ 201 et seq. ("FLSA"), and
Articles 6 and 19 of the New York Labor Law §§ 190,
650 et seq. ("NYLL")-impose compensation
obligations.
In the
case at bar, we consider the applicability of this test to
individuals enrolled in a for-profit vocational academy who
are preparing to take a state licensure examination and who
must first fulfill state minimum training requirements. These
individuals fulfill those requirements by working under
Academy supervision for a defined number of hours, without
pay. We determine that the Glatt test governs in the
for-profit vocational training context, and we further
conclude that here, the plaintiff, former student of the
Academy was the primary beneficiary of the relationship, thus
excusing the latter from potential compensation obligations
under FLSA or NYLL related to plaintiff's limited work
there as a trainee.
BACKGROUND[1]
On
April 18, 2011, desiring to become a cosmetologist in New
York state, [2] Patrick Velarde enrolled in the Academy, a
for-profit cosmetology training school operated by the
individual defendants and located in the City of Tonawanda,
in Erie County, New York. On November 16 of that year, he
finished the Academy's program, having successfully
completed what the Academy's diploma describes as a
"1000 hour course of study in [c]osmetology [a]pproved
by the state of New York." App'x 96. The
Academy's course included both classroom instruction and
supervised practical experience in its student salon (the
"Salon"), in which members of the public could
receive cosmetology services and the Academy's students
could practice and refine their skills. Velarde provided such
services, under supervision, as generally described by his
enrollment agreement and course catalogue.
Having
become a licensed cosmetologist in 2012, Velarde sued the
Academy for unpaid wages in 2014-three years after completing
the program. He alleged that the Academy violated FLSA and
several sections of NYLL by failing to pay him for the work
that he did in the Salon while he was enrolled at the
Academy. In his operative complaint, [3] he charged that, "under
the terms of the students' enrollment agreement," he
and all students enrolled in the Academy were unlawfully
required to work without pay in the Salon as part of their
course of instruction. Am. Compl. ¶ 4, App'x 8;
Enrollment Agt., App'x 98. After finishing eight weeks in
the classroom, Velarde worked at the Salon, logging 34 unpaid
hours per week for 22 weeks and practicing under the
supervision of licensed practitioners. During those 22 weeks,
he performed "barbering and hair styling, skin and body
treatments, [and] manicure and pedicure services," for
the public. Am. Compl. ¶¶ 4, 19, App'x at 8,
11. He and other Academy students were also obligated to
perform janitorial and clerical work at the Salon. Students
in the Salon segment of the vocational program were further
required, he complains, to provide "whatever
cosmetological service was demanded by a customer": they
could not "choose what services they wanted or needed
additional training in." Am. Compl. ¶ 37(c),
App'x at 15. Velarde sought relief both on his own behalf
and on behalf of other former and present students.
For
Salon services, the Academy charges clients "discounted
prices," with prices "vary[ing] according to
student [skill] level." Am. Compl. ¶¶ 25-26,
App'x 12. The Salon's rates are lower than those of
nearby salons employing only cosmetologists who are already
licensed. The Academy-which is, as mentioned, a for-profit
enterprise- derives some of its revenues from the fees paid
by the Salon's clients. Velarde would receive tips for
his work, but any gratuities were nominal in amount. The
Academy also derives revenue directly from students, of
course: over the course of his thirty-week course of study,
Velarde paid the Academy $12, 823 for "tuition, books,
kits, and other fees." Am. Compl. ¶ 18, App'x
10.
To
offer commercial cosmetology services in New York, an
individual must obtain and maintain a State cosmetology
license. N.Y. Comp. Codes R. & Regs. tit. 19, §
160.2. New York requires license applicants to have completed
1, 000 hours of coursework in defined subject areas,
including safety and health, hair styling, and nail care.
Id. § 162.4. Aspiring cosmetologists must also
pass the state's licensure examination, which has both
written and practical components. N.Y. Gen. Bus. Law
§§ 406(2)(b), 407(1).
In his
suit, Velarde sought unpaid hourly minimum wages including
tips and overtime for his work in the Salon. He contended
that, for purposes of FLSA and NYLL, he and other Academy
students were employees of the Academy while they performed
services in the Salon.[4] In 2016, after the Academy filed its
Answer, the assigned Magistrate Judge (Schroeder, Jr., M.J.)
filed a report and recommendation concluding that the
Academy's motion for judgment on the pleadings should be
granted. In a 2017 text order, the District Court rejected
Velarde's objections, accepted the Magistrate Judge's
report and recommendation, and entered judgment for the
Academy.
This
appeal followed.
DISCUSSION
We
review de novo a district court's decision
awarding judgment on the pleadings. Mantena v.
Johnson, 809 F.3d 721, 727 (2d Cir. 2015).
The
federal Fair Labor Standards Act requires, among other
things, that employers pay "[e]mployees engaged in
commerce" an hourly minimum wage. 29 U.S.C. §
206(a). Similarly, the New York Labor Law requires state
employers to pay their "employees" a set minimum
wage.[5] N.Y. Lab. Law § 652. As described
above, Velarde's action calls for us to decide whether
students at a for-profit vocational school completing
state-mandated training hours in preparation for (and to
qualify for) a state licensure exam are correctly treated as
"employees" of their respective schools with
respect to the "work" that they do as they are
training.
We have
observed elsewhere that FLSA and NYLL define
"employee" in "nearly identical terms."
Glatt, 811 F.3d at 534. Accordingly, "we
construe the NYLL definition as the same in substance as the
definition in the FLSA."[6] Id. FLSA's
definition of "employee," however, is far from a
model of clarity: it offers the unenlightening tautology that
an "employee" is an "individual employed by an
employer." 29 U.S.C. § 203(e)(1). FLSA advises
further that to "employ" means "to suffer or
permit to work." Id. § 203(g).
On de
novo review, we first conclude that the District Court was
correct to analyze whether Velarde was an
"employee" of the Academy by using the
"primary beneficiary" test established in
Glatt. Applying that test, we then determine that
Velarde was not an employee of the Academy when enrolled
there and working in the Salon, because he was the primary
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