"Calif. Wage Law Covers Beauty School Students, Judge Says"

Law360, July 31, 2014 

A California federal court refused Wednesday to toss out the bulk of a putative class and collective action claiming Amarillo College of Hairdressing Inc. unlawfully staffs its salon business with unpaid student workers, rejecting the argument that the students didn't qualify as employees. 

U.S. District Judge Philip S. Gutierrez dismissed — with leave to amend — the plaintiff's claims against Gary Yasuda, the president of Amarillo College, which does business as the Milan Institute and the Milan Institute of Cosmetology.

But the court declined to dismiss California law claims against the school that included alleged failure to pay wages, failure to pay overtime and unfair competition, over the school's argument that its student were not its employees.

The California Legislature specified that two types of people — unpaid externs and individuals working outside licensed establishments without compensation — can practice cosmetology without being paid, Judge Gutierrez noted.

"The Legislature could have carved out a similar provision for students performing services within their schools for the fee-paying public. It chose not to. This court cannot and will not usurp the Legislature's role by rewriting the [state Cosmetology Act]," Wednesday's ruling said. 

The decision is important because there were several similar lawsuits filed against beauty schools around the same time, and the Milan suit is the first of that crop to yield a ruling on a motion to dismiss that tested the theory that the plaintiffs should be treated as students exempt from state wage laws, said David Lowe of Rudy Exelrod Zieff & Lowe LLP, which represents the Milan plaintiffs. 

"The court rejected the defendants' theory that the workers in the salons owned by the beauty school should be treated as students, not employees," Lowe said. "That's big for the whole industry."

The Milan suit, lodged in October 2013, claimed that the defendants exploited the labor of aspiring professionals such as the three named plaintiffs, who identified themselves as former students and employees. 

In addition to running for-profit cosmetology schools, Milan also provides cosmetology services to the public for a fee and sells beauty products, the complaint said, adding students perform cosmetology, barbering and manicure services for paying clients and do things such as clean, sweep and fold laundry without compensation. 

Milan said its relationships with students were governed by state law that forbids anyone from paying students before they receive a license to practice cosmetology. 

The Cosmetology Act doesn't explicitly say whether students must be paid for worked performed within cosmetology schools, Wednesday's ruling said. But Milan said the issue was settled by the 1944 appellate decision Hutchison v. Clark, which nixed an Industrial Welfare Commission order that required cosmetology schools to pay students with who had completed a certain amount of their education.

But the plaintiffs said Hutchison was trumped by the 2010 California Supreme Court ruling Martinez v. Combs, which turned on the proper definition of "employer," and Judge Gutierrez said that after Martinez, Hutchison "is no longer good law."

An attorney for Milan could not be immediately reached for comment.

The defendants are represented by Keith Zakarin, Julie Vogelzang and Rebecca Church of Duane Morris LLP.

The plaintiffs are represented by Leon Greenberg and Dana Sniegocki of the Law Office of Leon Greenberg; David Lowe, Chaya Mandlebaum and Michelle Lee of Rudy Exelrod Zieff & Lowe LLP; and Bryan Schwartz and Adetunji Olude of Bryan Schwartz Law.

The case is Ford et al. v. Amarillo College of Hairdressing Inc., case number 5:13-cv-01961 in the U.S. District Court for Central District of California.