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"<p>Aspiring beauticians aren\u2019t entitled to salaries from payments their educators collect from customers, a Chicago federal judge has ruled.<br>\n<br>\nU.S. District Judge John J. Tharp Jr. issued an opinion Oct. 27 in a class action lawsuit from cosmetology students of Regency Beauty Institute who argued the work they did for paying customers classified them as, not just students, but employees under the federal Fair Labor Standards Act. Regency moved for summary judgment in its favor, and Tharp agreed.<br>\n<br>\nThe lawsuit\u2019s named plaintiff is former Regency student Venitia Hollins, who enrolled in January 2011 in the for-profit school\u2019s Merrillville, Ind., location, later transferring to its Tinley Park campus and graduating in April 2012. From there, she has worked two salon jobs and had a cosmetology business on the side, court documents said.<br>\n<br>\nAccording to Tharp\u2019s opinion, Hollins said \u201Cshe understood that she would not be compensated for her time spent working with paying customers. She even went as far as saying that, to her, it was a matter of \u2018common sense\u2019 that she would not be paid by Regency. She also acknowledged that Regency did not guarantee that she would be employed upon graduation. She now contends, however, that while they were practicing the techniques learned in the rehearsal phase - and earning credit hours required by state law - she and her peers were not Regency\u2019s students, but were rather Regency\u2019s employees and, accordingly, should have been paid for their work on the performance floor.\u201D<br>\n<br>\nRegency charges customers below market prices for the services its students provide, generating about $10 million in annual revenue in 2011, 2012 and 2013. That accounts for about 10 percent of Regency\u2019s revenue during those years. But while Hollins contends \u201Cperformance floor sales accounted for 76.36 percent of Regency\u2019s profits,\u201D the school said \u201Cthe students are comparing the total revenue obtained from performance floor sales (which does not deduct expenses) with Regency\u2019s total profit (which is revenue, less expenses) made during the same three-year period.\u201D<br>\n<br>\nThose and other disputed facts, Tharp notes, are largely immaterial because the main concern is whether students are employees per FLSA rules. The school argues students \u201Creceived the primary benefit of their relationship with Regency,\u201D and thus are not employees. Hollins contends the school displaces licensed cosmetologists who charge full prices for the services Regency students provide. She also said the school\u2019s economic benefit from the performance floor necessarily defines students as employees.<br>\n<br>\nAs Tharp noted, the way to determine employee status under the FLSA is, per the Seventh Circuit, \u201Cto assess the \u2018economic reality\u2019 of the relationship between the proffered employee and his alleged employer. In this case, the value of the training Regency provides is the significant factor.<br>\n<br>\n\u201CThe context is not a conventional economic relationship in which one party provides a service and the other pays for it,\u201D Tharp wrote. \u201CAlthough the comparison may make Regency squirm, there is an analogy to be drawn between the work performed by prisoners and by students because in both cases that work is a component of required training for the workers. That component - the need for training - further complicates the analysis of the \u2018economic reality\u2019 of the relationship between vocational students and a school or business that uses their services.\u201D<br>\n<br>\nTharp granted Regency\u2019s motion for summary judgment, ultimately deciding, while the school does benefit economically from the arrangement, \u201Cthe work performed by the student is primarily performed for the benefit of the student, not the school.\u201D<br>\n<br>\nHollis and the class were represented in the matter by the law firms of Robert Orman & Associates, of Chicago, and attorney Leon Greenberg, of Las Vegas.<br>\n<br>\nRegency was defended by the firms of Morgan, Lewis & Bockius, of Chicago, and O\u2019Melveny & Myers, of New York.</p>"^^<http://www.w3.org/2001/XMLSchema#string>
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