(CN) - A Seventh-Day Adventist school in Dayton, Tenn., does not violate child-labor laws by requiring its students to work in a school-run nursing home and other programs, the 6th Circuit affirmed.
The Cincinnati-based federal appeals court said it would not award an injunction agains the school to the U.S. Department of Labor because students of the Laurelbrook Sanitarium and School are not "employees" under the Fair Labor Standards Act.
A Chattanooga federal judge had ruled as much after a seven-day trial in which he concluded that Laurelbrook students received the primary benefit of the work they performed by learning "practical skills about work, responsibility, and the dignity of manual labor in a way consistent with the religious mission of their school."
Laurelbrook operates a boarding school for students in grades 9 through 12 and a 50-bed nursing home that the school says assists in the students' education. There is also an elementary school for staff members' younger children.
The students spend four hours a day in class and four hours learning practical skills, in part, "so they can later serve as missionaries in foreign lands."
Part of their training consists of working in the nursing home kitchen or housekeeping departments. Students who are age 16 and older can train to become certified nursing assistants
"Students do not receive wages for duties they perform," U.S. District Judge Stephen Murphy III wrote for the appellate court's three-judge panel. "They are not entitled to a job with Laurelbrook upon graduation, and are expected to move on after graduation."
On appeal, Labor Secretary Hilda Soulis argued that the District Court incorrectly used the "primary benefit test" to assess whether the students were employees.
"She contends instead that the proper test is the one the Department of Labor's Wage and Hour Division formulated for persons participating in employer-sponsored training programs," the 21-page ruling states.
Murphy, sitting by designation from the Eastern District of Michigan, and the rest of the panel found that the Labor Department used a six-factor test that is "overly rigid and inconsistent with a totality-of-the-circumstances approach."
Laurelbrook had argued that the court need not analyze whether its students are employees because the federal labor law states that vocational school students cannot be considered employees.
The 6th Circuit rejected this contention, however.
"Concluding that students are not employees simply because they are students at a vocational school is precisely the type of labeling courts must resist," Murphy wrote. "Such an approach bypasses any real consideration of the economic realities of the relationship and is antithetical to settled jurisprudence calling for consideration of the totality of the circumstances of each case."
Reciting the trial court's findings, the judges noted that Laurelbrook "recycles" its revenue from students' work back into the programs.
Patients of the sanitarium that students help maintain pay Laurelbook, which also sells flowers and produce that the students help grow. Laurelbrook also earns money as students also help fix community members' cars and sell wood pallets they build.
"Beneficiaries of these services pay Laurelbrook directly and the money is recycled back into school programs," Murphy wrote.
"The value of these benefits to Laurelbrook, however, is offset in various ways," he added.
Laurelbrook students do not displace paid workers, and instructors have to spend extra time teaching the children when they could get the work done faster themselves, if they were so inclined.
"Moreover, as the district court found, Laurelbrook is not in competition with other institutions for labor, so Laurelbrook does not enjoy an unfair advantage over other institutions by reason of work performed by its students," according to the benefits.
Meanwhile, the students get hands-on training, engage in state-accredited courses of study and receive a well-rounded education touted by parents, alumni and employers.
"The Secretary discounts the value of these intangible benefits, but we agree with the district court that they are of significant value," Murphy wrote. "Courts that have addressed the value of such benefits have likewise concluded that they are significant enough to tip the scale of primary benefit in the students' favor even where the school receives tangible benefits from the students' activities."
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