Putting to Sleep the DOL Internship Test? Eleventh Circuit Adopts Primary Beneficiary Test for Student Nurses in Anesthesia Program

The Students sued Wolford College and related defendants, claiming that the Students should have been considered employees during their clinical internship work and, therefore, were entitled to minimum wage for each hour worked and overtime compensation for all hours worked over 40 in a workweek. The lower court concluded that the Students were not employees under the six factor test promulgated by the Department of Labor (DOL). In vacating the lower court’s order, the Eleventh Circuit explicitly rejected the use of the DOL test, and instead applied the Second Circuit’s recently developed “primary beneficiary” test.

Relevant Facts

The underlying facts of the case were largely undisputed. Florida tightly regulates the practice of nurse anesthesia to protect patients, since anesthesia delivery can carry a high risk. Performing the duties of a Certified Registered Nurse Anesthetist (CRNA) in Florida without a proper license or knowingly employing an unlicensed person to engage in CRNA duties constitutes a felony. 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. 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, and the National Board of Certification and Recertification of Nurse Anesthetists all mandate.

In the lower court, Defendants moved for summary judgment, contending that the SNRAs during their clinical hours were not employees. Defendants submitted evidence that all Students were notified at the start of their education that they were not guaranteed employment with Collier Anesthesia, a part owner of Wollford, 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.

The SNRAs contended 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 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 starting time. Consequently, the Students indicated, an eight-hour shift actually required SRNAs to work for a minimum of 8.75 to 10 hours per day.

Applying the DOL’s six factor test, the lower court granted summary judgment in the Defendants’ favor, holding that the Students were not employees during their clinical rotations. And, because they were not employees, they were not entitled to minimum wage or overtime pay under the FLSA.

The Eleventh Circuit’s Decision 

In vacating the lower court’s determination, the Eleventh circuit held that the lower court should not have used the DOL’s six factor test. Those six factors include:

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.
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.
    

The Eleventh Circuit explained:

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 special competence or role in interpreting a judicial decision.”Glatt v. Fox Searchlight Pictures, Inc., 791 F.3d 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.

Instead, the Eleventh Circuit adopted the Second Circuit’s primary beneficiary test as set forth in Glatt v. Fox Searchlight Pictures, Inc., 791 F.3d 376, 383 (2d Cir. 2015), which considers the following:

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.
    

The Court explained that under the Second Circuit’s approach, no one factor is dispositive and every factor need not point in the same direction for the court to conclude that the intern is not an employee. 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.

The Eleventh Circuit further cautioned that in applying the factors to ascertain the primary beneficiary of an internship relationship, proper resolution of a case may not necessarily be an all-or-nothing determination. For example, there could be 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. Under those circumstances, the student would not constitute an “employee” for work performed within the legitimate confines of the internship but could qualify as an “employee” for all hours expended for tasks that go beyond the pale of the contemplated internship that it clearly did not serve to further the goals of the internship. The Court then remanded the case for application of the primary beneficiary test to the facts of the SNRAs’ internship to determine if the Students were employees or interns.

Conclusion

The Schumann case is very important for employers because it is another Circuit Court decision that adopts the Second Circuit’s primary beneficiary test and applies it to internships in the medical setting. It is also important because it suggests that interns may be considered employees during one part of the program and interns during other parts of the program.