Five years ago, Hillary signed an independent contractor agreement with USA First. The agreement explicitly states that she is an independent contractor and describes her activities and remuneration at USA First's gym in Missoula, Montana ("the gym"). Ten other personal trainers, several group fitness instructors, and three massage therapists, all of whom have signed independent contractor agreements, also provide services at the gym. USA First has particularly valued its ongoing relationship with Hillary because of her background in postpartum and cardiac rehabilitation fitness, specialties that USA First advertises in its promotional material.

For a monthly fee, USA First members are entitled to use the USA First swimming pool, locker room facilities, and fitness equipment; participate in group fitness and strength training classes; and get guidance about using the fitness equipment. For an additional $50 fee, members can book 1-hour personal training sessions and massages. While most of USA First's revenues are generated by the monthly membership fees, a substantial stream of revenue flows from the personal training and massage sessions, which are popular with the members.

Under the terms of her agreement, Hillary is required to be at the gym on Monday through Thursday, from 6:00 a.m. to 6:00 p.m. USA First pays her $10 an hour for that time. If USA First books Hillary for a personal training session, it pays her an additional $20 for each session. Pursuant to her agreement, Hillary must lead a group strength training class at 9:00 a.m., Monday through Thursday; answer members' questions about fitness equipment; and fill in for instructors who call in sick or are otherwise unavailable to teach their group fitness classes. When she leads a group class, Hillary must use the format and music designated by USA First. Hillary, however, has free rein in her one-on-one personal training sessions, which take place at the gym using USA First equipment. Hillary provides a new set of TheraBands to each client at their first training session.

Hillary is free to wear the attire of her choice, but must sport a USA First logo. Hillary gets an employee discount at the gym's shop, which offers a wide variety of branded merchandise, including leggings, shorts, T-shirts, and sports bras.

Hillary is thinking about offering weekend "bridal boot camps" at a local community center, where she can rent floor space. She plans to charge $150 per person for a 10-class boot camp series.

Last week, Hillary found out that USA First is paying $25 per session to three new trainers, Don, Mike, and Jeff. In response to her inquiry, USA First said that because the men had rejected the standard $20 rate, it had no choice but to meet their demands.

Hillary has now filed a discrimination complaint against USA First with the Montana Human Rights Bureau pursuant to state law. For purposes of this assignment, assume that the state law only applies to employees and that it incorporates the economic realities test discussed in the Lesson 2 course reading. Using the IRAC approach that we discussed last week,

1. Identify the important preliminary issue that the state agency will need to address before Hillary's administrative claim against USA First can proceed. (Hint: the preliminary issue is not whether there was gender or sex discrimination.)
2. Analyze that preliminary issue in the context of our facts. Using the economic realities test (the rule here), please discuss the facts that would tend to support Hillary's position on the preliminary issue and why they would support it, the facts that would tend to undermine her position and why they would have that impact, and any additional facts that would be important to know and why they would matter.
3. Finally, describe the conclusion that the Human Rights Bureau would likely reach on the preliminary issue based on our facts, and explain the basis for your conclusion.

USA First wants to establish an unpaid internship program for personal trainers and strength coaches. How should it structure this program in order to avoid Fair Labor Standards Act issues? What specific features should the program include, and what specific features should it avoid in light of the course reading, including the Lesson 2 commentary and the updated DOL Fact Sheet #71?