Cosmetology student was not an employee when working at the school's training salon

Patrick Velarde sued The Salon Professional Academy of Buffalo and its owners (Academy) for wages he claimed were owed under the Fair Labor Standards Act (FLSA) and New York Labor Law §§ 190, 650 et seq. for work he performed during his cosmetology vocational training at the Academy. The district court held Velarde was not an employee of the Academy and granted it judgment on the pleadings. The 2nd Circuit affirmed. Velarde v. GW GJ Inc (2nd Cir 02/05/2019) [PDF].

Velarde enrolled with the Academy, a for-profit cosmetology training school, for a 1,000 hour course of study designed to satisfy the coursework requirement for state licensure. Part of his coursework included working under supervision in the Academy salon. The Academy charged customers reduced rates for services performed by students. Velarde and the other students were not paid for their work but received modest tips from customers. After graduation, Velarde became a licensed cosmetologist and sued the Academy for unpaid minimum wage and overtime on the theory he was an employee when he worked at the Academy salon.

In affirming the dismissal of Velarde's lawsuit, the 2nd Circuit held the "primary beneficiary test" announced in Glatt v. Fox Searchlight Pictures, Inc. (2015) for determining when interns are employees in the commercial setting applied to determine whether a trainee in the for-profit vocational training context is an employee. The court concluded the applicable Glatt factors demonstrated Velarde was the primary beneficiary of the relationship given that the 1,000 hours of instruction from the Academy satisfied the coursework requirement for state licensure. The court concluded the fact the Academy charged customers for student work was immaterial because it was entitled to generate a profit on its operations.

This decision is in accord with decisions of the 6th, 7th, and 10th Circuits addressing the same issue.