Labor & Employment Law Daily Son who shadowed father to learn to be automobile wholesaler might be dealership employee
Thursday, October 12, 2017

Son who shadowed father to learn to be automobile wholesaler might be dealership employee

By Ronald Miller, J.D.

Finding that a plaintiff who shadowed his father to learn the automobile wholesaling business might have been a trainee at times and an employee at others, the Eleventh Circuit, in an unpublished decision, concluded that material issues of fact precluded summary judgment. Applying the factors outlined by the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc., to assess the primary beneficiary of the relationship between the plaintiff and an automobile dealership, the appeals court found the analysis inconclusive. Accordingly, it vacated a district court’s grant of summary judgment in favor of the employer (Axel v. Fields Motorcars of Florida, Inc., October 6, 2017, Moore, M.).

Toward the end of 2012, the plaintiff applied for a sales position at Fields Motorcars, but did not receive an offer. In the years preceding that application, he had been arrested for driving while intoxicated, fired by a different employer for failing to show up for work, and sought treatment for drug addiction. The plaintiff’s father worked as an automobile wholesaler for Fields Motorcars. He approached his supervisor about finding a job for his son. Ultimately, they settled on an arrangement whereby the plaintiff’s father would hire him as an employee and teach the plaintiff how to become an automobile wholesaler, with the future possibility of assuming his father’s role upon retirement. There was no agreement that Fields would compensate the plaintiff while he was learning how to be a wholesaler.

Shadowing dealership employee. For the next 15 months, the plaintiff shadowed his father. He reviewed inventory, attended a daily used-car meeting, met with the used car manager regarding the posting of cars for sale, and posted cars for sale on a website for an on-line auction for dealers. The plaintiff also purchased cars from other Fields dealerships. His duties also included traveling to different auctions. He estimated that he worked in excess of 60 hours per week. This arrangement continued until his father was terminated, at which point the plaintiff stopped working as well. The plaintiff sued Fields alleging violations of the FLSA and the Florida Minimum Wage Act.

In the district court, the employer filed a motion for summary judgment. The district court found that the plaintiff was not an employee of Fields, and granted summary judgment in its favor on the FLSA and FMWA claims. The plaintiff appealed.

Intern versus employee. To determine whether an individual is an employee or an exempted trainee, courts look to the totality of the circumstances. In Schumann v. Collier Anesthesia, PA, the Eleventh Circuit stated that the best way to discern the primary beneficiary in a relationship where both the intern and the employer may benefit significantly is to “focus on the benefits to the student while still considering whether the manner in which the employer implements the internship program takes an unfair advantage of or is otherwise abusive towards the student.” In Schumann, the appeals court analyzed seven non-exhaustive considerations borrowed from the Second Circuit’s decision in Glatt v. Fox Searchlight Pictures, Inc.

Schumann also concluded that an individual’s employment status may be bifurcated depending on either the task or the hours worked beyond what could fairly be expected. The Eleventh Circuit cautioned that in applying the factors to ascertain the primary beneficiary of an internship relationship, the proper resolution of the case may not necessarily be an all-or-nothing determination. That is, 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 part of the internship.

Primary beneficiary. Here, the appeals court observed that during the 15 months that the plaintiff worked at Fields, he was learning the business of an automobile wholesaler from his father. While he was not enrolled in a formal educational program, he was afforded the opportunity to learn a trade by observation and practical application. It found the approach provided by Schumann the most applicable guidance for the employment relationship in this case. Specifically, the court considered the non-exhaustive Glatt factors in assessing the primary beneficiary of the relationship between the plaintiff and Fields.

Glatt factors. The first Glatt factor—expectation of compensation—did not support a finding that the plaintiff was an employee since he did not receive any compensation. Glatt factors two through four were inapplicable here as they were tailored to training in the context of a formal academic program. The fifth Glatt factor—duration—did not clearly cut in either direction. The relevant inquiry was whether the duration of the training was necessary to accomplish the goals of the training. The record was unclear as to what the goals were, whether those goals were met and, if so, when those goals were met.

Still, the appeals court noted that at 15 months, the training period seemed fairly long, and it was not evident that the plaintiff’s work was limited to the period in which the training provided beneficial learning. The training period was presumably indefinite since it was tied to the retirement of the plaintiff’s father, which had no certain date. Although inconclusive, this fact suggested that the duration of the training might have been excessive. Consideration of the plaintiff’s work schedule was also relevant to this inquiry. It was possible that the plaintiff’s alleged 64-hour work week was excessive for purposes of meeting the goals of his training.

Further, a review of the sixth Glatt factor—displacement of work—suggested that the plaintiff was a trainee at times and an employee at others. The contours of his workday were primarily defined by his father’s job. However, he also performed wholesaling work which his father did not do. This “extra” wholesaling work was done at the direction of others. Apart from wholesaling, the plaintiff was also involved in retail sales, tasks that were beyond the scope of his father’s work.

The seventh Glatt factor—entitlement to a paid job at the end of the training—did not support a finding that the plaintiff was an employee, since there was no understanding between the plaintiff and Fields that he would be entitled to a paid position at the conclusion of the training. Because the plaintiff did wholesaling work at the direction of others, as well as other work unrelated to wholesaling, the appeals court found material issues of fact remained regarding how much time he devoted to tasks that extended beyond his training. Accordingly, the court vacated summary judgment in favor of Fields because it could not conclude that the plaintiff was not an employee at times.

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